An overwhelming majority of early venture-backed startups utilize a standard four-year vesting schedule with a one-year cliff. It seems like the ultimate one-size-fits-all template. Yet almost no one talks about how this default framework routinely causes bitter legal battles over founder equity, wasting hundreds of thousands of dollars on litigation that could have been avoided. From a VC's perspective, and that of the remaining partners, this is pure dead weight. You now have someone holding 15% to 20% of the equity who is no longer providing any value. Of course, contractually it's theirs, and they've usually earned it. Five to 10 years ago, investors might have tolerated a departed founder holding 5%, 10% or even 20% of the company. Today, that threshold has collapsed. Many VCs will now insist that a former founder hold no more than 2.5% of the cap table. Initially, this usually involves pressuring them to give up shares 'for the goodwill of the company.' When that fails, they...
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