Jeff Mattson, a Partner in the Corporate practice group at Freeborn, was featured in the article, “Vesting of Founder’s Stock,” which was published June 27, 2013, on Alleywatch.com.
“Founders of a startup are frequently surprised when venture capital firms or other investors ask for vesting provisions to be placed on the founder’s stock. The investors are seeking to provide sufficient incentive for each founder to work through the company’s critical early formation and development phase. If a founder leaves the startup early in the process, it would be unfair to the other founders and the investors for the departing founder to receive a “free ride” on the continuing efforts of the other founders. The vesting terms cause a forfeiture of the unvested shares or a repurchase at a low cost upon termination of employment, thereby eliminating the free ride.”
In the article, Jeff reviews key issues of a vesting structure, the common reasons to adjust a vesting schedule and tax issues to consider.
Visit Alleywatch.com to read the full article, Vesting of Founder’s Stock.
