Founder vesting is one of the least debated and most consequential clauses in a startup term sheet. It sits quietly in the shareholders agreement and activates at the worst possible moment: when a co founder leaves, whether by choice or not. The difference between well drafted and poorly drafted vesting and leaver clauses can be the difference between walking away with a full stake and walking away with almost nothing. Every founder signing a Series A term sheet should understand exactly what these clauses do.

What founder vesting actually is

Despite the name, founder vesting does not mean founders earn their shares over time from scratch. Founders already own the shares at incorporation. Vesting in the fundraising context is a reverse vesting mechanism. The shares are owned, but if the founder leaves before the vesting period ends, a portion of those shares goes back to the company or to the cap table at a discounted or nominal price.

The principle, from the investor's perspective, is straightforward. If a co founder walks away one year into a five year vesting period, the company should not be left with an absentee shareholder holding a meaningful block of the equity. Reverse vesting makes sure the equity follows the work.

Typical structures in Belgian deals

The Belgian market has converged on a fairly standard structure. Four year vesting with a one year cliff is the default. The cliff means that if the founder leaves in the first twelve months, nothing has vested. After the cliff, vesting is typically monthly or quarterly, linear over the remaining period.

Some deals apply vesting only to a portion of founder shares, leaving a base block fully vested at signing. This is negotiated and worth asking for, especially for founders who have already built the company for several years before the institutional round.

Good leaver versus bad leaver

The key question is what happens to unvested shares when the founder leaves. The answer depends on whether the founder is classified as a good leaver or a bad leaver.

A good leaver typically retains all vested shares and may receive additional treatment on unvested ones. Classic good leaver triggers include death, permanent disability, dismissal without cause, and sometimes resignation after a minimum period.

A bad leaver loses a significant portion of their equity, often including vested shares at a discounted buyback price. Bad leaver triggers typically include voluntary resignation within the vesting period, dismissal for cause, and material breach of the shareholders agreement.

The traps in bad leaver definitions

This is where the drafting matters most. Several definitions deserve close scrutiny.

Dismissal for cause. What qualifies as cause? A tight definition limits it to gross misconduct, fraud, or material breach of the shareholders agreement. A loose definition can capture performance issues, disagreement with the board, or strategy disputes. The difference is material.

Voluntary resignation. Is it automatically bad leaver, or is there a carve out for resignation after a certain period? A bad leaver clause that catches any resignation for the full vesting period is highly restrictive. A three year cliff after which voluntary resignation becomes good leaver is much more founder friendly.

Buyback price. At what price does the company or investors acquire the forfeited shares? At the lower of cost or fair market value is aggressive. At fair market value is fair. The mechanism should be clearly defined, with a dispute resolution path.

Acceleration on exit

A separate but critical mechanism. If the company is sold before vesting is complete, founders usually want accelerated vesting so they receive their full stake on exit. Two structures exist. Single trigger acceleration vests all remaining shares on a change of control. Double trigger acceleration vests remaining shares only if the founder is terminated after the change of control. Investors generally prefer double trigger. Founders should push for single trigger, at least on a portion of their shares.

What to negotiate before signing

The term sheet is the moment to negotiate these clauses, not the shareholders agreement draft. Once the term sheet is signed, most investors treat vesting terms as closed.

The dups approach

Founder vesting and leaver clauses should be reviewed before the term sheet is signed. We model what each clause means in concrete exit scenarios and make sure founders understand exactly what they are signing. The clauses that matter most are the ones that activate when things go wrong, and founders should never discover them at that moment. If you are about to sign a term sheet with vesting mechanics, let us look at the language first.