https://handbook.clerky.com/hiring/vesting-acceleration
Does it mess with the company valuation or who gets paid out? Isn't this a bit unfriendly to early employees?
The short video here (not the written stuff on the page) may be helpful:
https://www.ycombinator.com/library/5x-how-to-split-equity-a...
A company is like a living organism. Living organisms have inputs and outputs and that's part of being alive.
In this case, one "output" is that people leave sometimes. The fact that it happens is natural and normal. But you don't want them to leave in a way that's like cutting out your heart without anesthesia.
The idea is that it's bad because the employees might leave if you reward them with a lot of money. But if you screw them out of a lot of money (when the startup gets acquired, aka the traditional exit event that generated employee rewards), they're even more likely to leave.
The argument that the IP remaining in the startup is useless if the employees leave is ridiculous, because if that is the case, then the valuable asset is not the IP, but the employees themselves.
The undesirability of vesting acceleration is thus generally limited to the VC-funded tech community, as it is otherwise considered a desirable benefit everywhere else.
All that follows seems trivial after we acknowledge that interests of employers and employees don't align, but for the sake of clarity: it creates a 'reward' scenario for employee that isn't a 'reward' scenario for employer (further, compared to vesting taking place at all). Buying party loses asset in a form of trained employee motivated to increase company value, which lowers the value of acquisition. Nobody wants to lose money.
iirc, most (good?) acquisition agreements come under the condition that the founders stay on for a period of time and hit performance goals, and i'm assuming this still includes accelerated vesting.
i guess i'm wondering why that doesn't apply to employees?
Makes sense, thanks for answering!