Why Your Common Stock Grants Need Vesting Schedules (Even If You’re Solo)

Ryan Nash , COO , Gust INC

17 Mar 2025

This write-up was originally sent to subscribers as a part of our Mission Control weekly insights, a series where we share wisdom and quick breakdowns on topics from our entrepreneur support network.

This week we’re talking vesting schedules for common stock. Vesting schedules aren’t just a formality—they’re a fundamental part of building a strong, aligned founding team. Investors expect them, they help protect your cap table, and they ensure that equity is fairly distributed over time.

Key takeaways

Vesting on common stock grants establishes the right for the company to repurchase shares at the same price as granted should a team member leave earlier than planned. This upfront agreement protects the company from unbalanced ownership resting with departed team members. It also keeps the tax incentives intact for repurchased shares should they be granted to others later. When granting common stock you’ll want to be sure each grant has an appropriate vesting schedule that maps to the nature of the role.

The Basics of Vesting Schedules

• Who gets them? Founders, early team members or contributors, and advisors who receive common stock.
• How do they work? Vesting allows the company to repurchase unvested shares if someone leaves early. Vesting is commonly on a monthly basis where 1/n share vest each month, where ‘n’ is the total months in the schedule. They usually have a cliff which is how many months until any vests at all. The right is agreed upon at the moment of the grant so as soon as someone leaves or is terminated the company can repurchase all unvested shares.
• Why are they important? They keep ownership aligned with contributions and prevent equity from being locked up by inactive shareholders (often called “dead equity”). They also protect the tax incentives of common stock so everyone can share in the upside equally.
• Do they limit my control? Nope, not while you’re still with the company. You have the full ownership and voting rights of your complete grant amount even if it has a vesting schedule. This is why it’s a repurchase and not an ‘earned right’ like stock option vesting.

Standard Vesting Schedules

• Founders & Early Team Members: 4 years with a 12-month cliff—ensures long term commitment and allows for a proving period.
• Advisors: 2 years with a 3-month cliff—quicker vesting since their value should be immediately felt.
• Contractors or other contributors: Custom length schedules based on deliverables and engagement level, be sure to keep it time-based and allow for enough room in the cliff to evaluate if the relationship is working.

Solo Founders: Yes, You Need a Vesting Schedule Too

Even if you’re the only person in the company today, setting up a vesting schedule is a smart move. Investors will require it anyway, and it signals to future co-founders and team members that you’re committed to the business at the same terms they would be—not just to your own equity stake.

Bottom Line

Vesting schedules protect your startup’s future. They ensure equity is protected, keep investors confident, and allow for smoother transitions if things change. Set them up early to avoid problems down the road.

Got questions on structuring your vesting schedule? Or got yourself into a no-vesting or weird-vesting pickle already? Gust provides support through our Mission Control program to help you understand concepts like this, fix’em up if necessary, and make good decisions going forward. Still need to grant actual ownership? Gust Launch makes establishing and running a Delaware C Corp a breeze—and you Mission Control folk get a big discount on it! We can even onboard or convert some already existing Corps or LLCs to our streamlined platform if they’re eligible. More on that soon.

Gust's Mission Control can guide early founders through all sorts of complex startup hurdles, like vesting schedules.

Check out Gust MC!