Shareholder agreements

Solo founder stock plan and vesting

Dante Martin My mission is to keep humans ahead of the machines.

Last updated on August 17th, 2017

If you are on here the odds are good you don't have a co-founder. So for those of you moving forward anyway, how are you approaching vesting of your shares?

I want to set up a stock plan to support outside investment if things go well with my app. Angel investors expect founder's shares to vest so founders don't bail when the going gets tough. But does this apply if there is only one founder?

I'm thinking that 20% to 30% of the stock should be set aside for an employee option pool and early investors. However, I'm stumped about founder vesting. I'd appreciate any advice or insight on this. If vesting for me does make sense, should it apply to my whole share? I'd rather have a 50/50 vesting to non-vesting split since since I'm assuming all the risk, proving product market fit, and getting to revenue on my own.

Pavel Bondarev Founder & CEO. PhD in Math & Computer Science. Keen on Predictive Analytics and AI.

August 18th, 2017

Dante, with respect to the founders' shares, they are usually divided by portions and vested in a time depending on achieved results.

For example, a co-founder has 1,000,000 issued shares. Halve it and split the portions for "personal" and "team" achievements. The "team" one (500,000 shares) will be vested in a certain period of time - e.g. in 2 years. The "personal" portion is divided by smaller portions - e.g. 8 pieces (62,500 shares each) - that are vested quarterly if a co-founder is still with the company (and his/her goals are successfully achieved). Thus, at the end of this two-year period the co-founder gets 500,000 "personal"-based shares and, if (s)he is with the company, the second half ("team"-based) too.

This approach enables both the company and co-founders to be on the safe side. If a co-founder is leaving after e.g. 1.5 years (s)he has got 375,000 shares vested only for what had been done.