When we make a decision of starting a start-up, there is a confusion on when and how the shares of the company have to be set up. It must be made such that the employee is benefitted from the success of the business. To make sure this happens, the start-ups follow the vested subscription model. This makes sure people or shareholders just don’t walk away. This makes them work for a minimum period to get enough shares. This has to be setup properly and a proper agreement has to be signed properly.
What is vesting?
Vesting is the agreement that follows a perfect model. Say there are 2 owners that own some shares and the other shares are owned by other investors. The Vested subscription model mayuse a 2-year cliff. This means that if one of the owners leave before 2 years, then the other cannot get any equity that they owned. If one leaves after 2 years, depending on the number of years he/she has worked, then they will be given a percentage of their share. Everything is very clearly stated in the agreement and is signed by everybody concerned.
Getting the perfect deal:
Not all businesses are the same type and with the same number of shareholders and investors. They all differ from each other and so does the vested scheme. There are separate schemes for employee, directors, advisors and founders and it should be made accordingly and must be agreed by everybody.
The Vested subscription model helpget the perfect share division and lesser loss. In the normal model, even when one leaves, they get the share that they owned. This makes it better as they only take a percentage of it and the rest can be bought by someone or sold to the investors. This way, it is a benefit for the company or the business.