Ask HN: Vesting? Really? | Hacker News Reader

Ask HN: Vesting? Really?

5 pointsgoodgoblin4 comments

My partner and I have a company that has attracted the interest of some investors and we are going to meet with them next week. We've been bootstrapping this for about 4 years and have reached a point that makes us attractive for a few reasons - some established customers, revenue and the interest in our company by potential acquirers.

So... we are thinking ahead to what kinds of terms to expect should we end up getting financing offers - and I was wondering if vesting is something we would have to agree to or not. I find the idea kind of makes me light-headed, and was wondering under what scenarios vesting, or other shady terms, we could end up losing everything we've worked for.

thx

If you've been going for 4 years then vesting is not in the picture. At least, with a reputable VC it would not be.

The VC should end up with a minority (<49%) block of shares, in that situation your biggest worry is a minority share holders lawsuit that you settle by giving them shares, they then control the company.

Such tactics are great for movies (they do happen in real life but very rarely).

Go with a VC with a good reputation and none of this should be your worry. The smaller the company you deal with and the shorter it's been in business the bigger the risk of trickery.

Good luck!

edit: if after the investment with the money from the investors you decide to bring on board more people that you want to become share holders in the long run vesting would be normal for the new hires. If they put money on the table to buy in then those shares (the ones being paid for) would not be vesting either.

Thank you for your sharing your insight.

If the VC wants vesting, put in terms. If you are removed by the investor, all stock is immediately vested. Basically, vesting is a way to make sure you're not going to walk away from the deal.

Agree. Sounds like you have leverage. Put in weird clauses that protect you if/when you get fired/replaced.

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