Vesting aligns incentives between the company and its stakeholders. Without it, startups risk compensating short-term involvement, which can lead to misalignment, unintended dilution and a potential hurdle to future funding. By structuring vesting schedules thoughtfully, founders can ensure equity is earned, not just granted, and that those holding it remain motivated to see the company succeed.
Beyond the well-established 4-year vesting schedule for founders, we reviewed over 1,600 recent option grants to determine the most common vesting terms for all other service providers—including employees, advisors and directors. Here’s what we found:
• 89% of founders and employees vest over 4 years
• 82% of consultants/advisors vest over either 2 or 4 years
• 92% of independent directors vest over 2 or 4 years
Questions to consider:
• Founders: What vesting schedule will keep you aligned with investors and the team?
• Consultants/Advisors: Does the schedule match the actual timeline for delivering value?