Vesting Schedule Calculator

How to use the vesting schedule calculator

1. Shares or options granted: the total number in the grant. If you think in percent of the company, enter your stake instead, such as 40, and read the results as percentage points.
2. Vesting period: the months it takes to earn the whole grant. Four years is 48 months.
3. Cliff: the months you must stay before anything vests. Enter 0 if the grant has no cliff.
4. Vesting after the cliff: how often a new slice vests once the cliff has passed. Monthly is the most common choice, but some grants vest every quarter or every year.
5. Months since vesting started: the full months completed since the vesting start date in your agreement. That date is not always the day you signed.

The result shows the shares vested so far, the shares still to vest, what vests on the cliff date, the size of each later step and a table of milestones. Change the last field to test a date in the future, for example the month a co-founder says they might leave.

The vesting formula

This is time-based vesting with a cliff, the standard setup for startup shares and options. Stripe Atlas, a company formation service, describes the usual founder terms as a four-year vesting period with a one-year cliff and monthly vesting, which works out to 1/48 of the grant each month. The calculator starts with those terms.

Where conventions differ, the calculator makes two choices. Steps are counted from the cliff date, so a quarterly grant with a 12-month cliff vests at months 12, 15, 18 and so on. And if the last step would run past the end of the vesting period, the remaining shares vest on the final day.

A worked example: four years with a one-year cliff

Say you and a co-founder each receive 960,000 shares. They vest monthly over 48 months with a 12-month cliff, and 18 full months have passed since the vesting start date.

If your co-founder left today, they would normally keep 360,000 shares and the other 600,000 would go back to the company. If they had left at month 11, one month before the cliff, they would have kept none. The milestone table under the result shows 240,000 shares at month 12, 480,000 at month 24, 720,000 at month 36 and all 960,000 at month 48.

Switch the same grant to quarterly vesting and move the date to month 20. The last completed step is month 18, so the result stays at 360,000 shares. On monthly vesting it would be 400,000. The less often a grant vests, the more a leaving date just before a step costs.

How to read the result

• Vested so far is what you have earned. For shares bought up front, as founders usually do, it is the part the company can no longer buy back. For options, it is the part you are allowed to exercise, which means paying the exercise price to turn them into shares.
• Not yet vested is what is at risk if you leave or are asked to leave. This is the number that matters in a co-founder breakup.
• Vests at the cliff shows how much rides on one date. A team that is unsure about a new co-founder is protected until that date. The new co-founder carries the risk until then.
• Fully vested in tells investors and hires how long the team is tied to the company. Founders who are close to fully vested are sometimes asked to restart part of their vesting when they raise money, a term that would appear in the term sheet.

Vesting decides how much of your grant you keep. It does not decide how big the grant is. Use the co-founder equity split calculator to work out the split, then put the same vesting terms on everyone. Vested shares can still shrink as a share of the company when you raise money, which the equity dilution calculator shows. Every grant and its vesting terms should be recorded in your cap table.

When to set up vesting

Agree vesting when you split the equity, before the company has value and while everyone still gets along. It is far harder to add after one person has stopped working. If you are still looking for a co-founder, raise vesting in the first serious conversation about equity. Someone who refuses any vesting is telling you something about how long they plan to stay.

Fonda's 14-step journey includes a Legal and setup step in the Launch phase and a Raise step in the Scale phase, the two points where vesting terms usually come up. It is free to start, and you can ask Marty, your AI co-founder, questions at any step. For the documents themselves you still need a lawyer in your country.

What the calculator leaves out

• Acceleration. Some agreements vest extra shares early if the company is sold, or if you are let go after a sale. The calculator assumes none.
• Milestone vesting. Shares that vest when you hit a target, such as a product launch or a revenue figure, do not follow a time formula.
• Uneven schedules. Back-loaded grants, where later years vest more than early years, are not modeled.
• Rounding and exact dates. Real plans round to whole shares and vest on specific calendar days. The calculator works in full months and shows results to the nearest share.
• Leaver terms. Some agreements treat a founder who is dismissed for misconduct differently from one who leaves on good terms, and can take back vested shares too. Read your own agreement.
• Option details. Exercise price, the window to exercise after you leave and expiry dates are separate from vesting.
• Tax. When and how vesting is taxed depends on your country and on whether you hold shares or options. In the US, Stripe Atlas notes that startup lawyers recommend a Section 83(b) election for founders who buy shares early. It asks for the shares to be taxed when you buy them and not each time a slice vests. Ask a tax adviser about this, and about filing dates, before you sign.