Can one founder have an option on another founder’s stock?

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JASON LEMKIN

It makes sense in theory, especially if it’s a bootstrapped company with just a few founders.

But in practice, a long vesting schedule with a significant cliff does most of the work for you.

This will automatically redistribute all or most of a departing founders’ stock to the other founders and shareholders.

A long founding vesting schedule and a true cliff incents the founders going for it for the long haul.

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Published on September 19, 2017
  • Albert Santalo

    I do believe that in certain situations founders should have an option or repurchase right on another founder’s equity. If a founder washes out after investors have begun to participate then the benefit of reverse dilution accrues to investors as well. Was in a situation once where 3 of four founders washed out over time and this literally changed the implied pre-money valuation of our Series-A dramatically. I can see arguments in either direction.

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