Founders’ Stock are shares issued to the key team responsible for establishing the Company and coming up with the initial business plan and intellectual property. It is usually very important to make sure the Founders continue to be actively engaged in the Company after an investment round, so Investors require that the Founders’ Stock be subject to vesting for a sufficient period. The standard Founder vesting terms are 4-year vesting with 25% after one year and monthly thereafter. It is best to set up the Founders’ Stock with vesting from the beginning, but if it isn’t, then Investors will often require vesting to be imposed on those shares at the time of the first financing.
Term Sheet Language: Buyback right/vesting for [__]% for first [12 months] after Closing; thereafter, right lapses in equal [monthly] increments over following [__] months.]