When founders and investors sign contracts, the details matter. What to look out for Getty Images/Oscar Wong
A contribution from Simon Stepper. He is a lawyer at Freshfields Bruckhaus Deringer in Munich and a lecturer at the Ludwig Maximilians University in Munich. He advises on all legal issues relating to corporate law and in particular on stock corporation law issues.
As part of financing rounds, founders are regularly confronted with the issue of vesting. The idea is that founding partners “earn” their shares in the startup over a certain period of time and may lose the shares again if they leave the startup in advance.
The economic purpose of vesting is to motivate the founders or the founding team to stay in the startup and to commit to the success of the company. It is intended to prevent founders from leaving the startup after a relatively short time and still retaining their shares. Especially in the case of startups, whose success depends largely on the business idea, commitment and skills of the founders, investors want to incentivize the founders not to leave the company at short notice. For this purpose, they regularly request the inclusion of a vesting clause in the term sheet of the financing round, which is then implemented in the investment agreement.
What legal questions do founders have to consider when vesting?
2024-01-04 06:36:25
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