What is equity vesting in startups?

What is equity vesting in startups?

Equity vesting is a process where startup employees earn their shares over time, rather than receiving them all at once.

How does the vesting schedule typically work?

A common vesting schedule is four years with a one-year cliff, meaning you earn 25% of your shares after the first year.

What happens if I leave the company before my shares fully vest?

If you leave before your shares are fully vested, you typically forfeit the unvested shares, but you keep the vested ones.

Can you explain the difference between vested and unvested shares?

Vested shares are those you own outright, while unvested shares are those you haven't earned yet and may lose if you leave.

Are there any tax implications I should be aware of?

Yes, there can be tax implications when your shares vest, as they may be considered income. It's best to consult a tax advisor.