# Free Co-Founder Vesting & Equity Split Agreement Template

- Link: https://clearlegaltips.com/co-founder-vesting-equity-split-agreement-template-2026/
- Published: 2026-06-03T09:00:00-04:00
- Author: ClearLegalTips

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## Download This Resource

Get the fillable agreement, the editable version, and an action checklist:

[📄Fillable PDFPrint & complete](https://clearlegaltips.com/wp-content/uploads/2026/07/cofounder-vesting-document.pdf)
[📝Editable DOCXFill in your details](https://clearlegaltips.com/wp-content/uploads/2026/07/cofounder-vesting-document.docx)
[✅Action ChecklistStep-by-step PDF](https://clearlegaltips.com/wp-content/uploads/2026/07/cofounder-vesting-checklist.pdf)

Two friends start a company, split the equity 50/50 over a beer, and start building.
Eight months later one of them stops showing up: new job, lost interest, life happened.
The problem is that the no-show still owns half the company, half of every future
funding round, acquisition, and vote, while the founder who stayed does all the 
work. This is the most common way early startups die, and one document prevents 
it: a co-founder vesting and equity split agreement. This guide gives you the copy-
paste agreement, the market-standard vesting terms, the clauses investors check 
for, and the one tax filing, the 83(b) election, that has a 30-day deadline with
no extensions and no second chances.

**The short version (2026):**

 * **Market standard is 4-year vesting with a 1-year cliff:** nothing vests for 
   12 months, 25% at the anniversary, the rest monthly through month 48. Founders
   who leave early keep only what vested.
 * **The 83(b) election is a hard 30-day deadline** from the day you receive your
   stock (26 U.S.C. §83(b)(2)). Since 2025 you can file the IRS’s Form 15620 online;
   miss the window and there is no fix.
 * **Split equity on contribution, risk, and role,** and write the reasoning into
   the agreement. A 50/50 chosen to dodge a hard conversation causes more damage
   later than an honest 55/45 now.
 * **Copy-paste template below,** plus the acceleration, repurchase, and IP clauses
   that make it investor-ready.

## What Is a Co-Founder Vesting Agreement?

![What a co-founder vesting and equity split agreement does](https://i0.wp.com/clearlegaltips.
com/wp-content/uploads/2026/06/cv2979-01-what-is-vesting.jpg?w=1290&ssl=1)

A co-founder vesting agreement is a contract that says founders _earn_ their shares
over time by staying and building, instead of owning everything outright on day 
one. Leave early, and the company can buy back or reclaim the unearned portion. 
The equity split side of the document records who gets what percentage, what each
founder contributed (cash, code, customers, intellectual property), and the rules
for issuing, transferring, and repurchasing shares.

Think of vesting as a retention mechanism with teeth. Without it, equity is a gift;
with it, equity is compensation that has to be earned. Investors expect founder 
vesting to exist before they wire a dollar, which is why nearly every venture-backed
company has it, and why putting it in place early, before there is anything to fight
over, is far easier than retrofitting it during a funding round.

## Why Every Startup Needs One (Even a Two-Person Team)

![What happens without founder vesting: dead equity and broken cap tables](https://
i0.wp.com/clearlegaltips.com/wp-content/uploads/2026/06/cv2979-02-why-needed.jpg?
w=1290&ssl=1)

“We trust each other” is exactly why founders skip this document, and exactly how
they get burned. Trust is not a legal structure. Here is what happens without vesting
when a co-founder walks after six months:

 * **Dead equity.** The departed founder keeps the full stake. It sits on your cap
   table doing nothing, diluting everyone still building.
 * **Fundraising stalls.** Investors see a large chunk held by a non-contributor
   and walk; it signals an unstable team and a broken cap table.
 * **No equity to hire the replacement.** The shares you would use to attract the
   person who fills the gap are locked up with the person who left.
 * **Deadlock.** A 50/50 split with no vesting and no tie-breaker lets a departed
   or hostile co-founder freeze major decisions.

Vesting converts all four from company-killers into routine cleanup. If the leaver
earned 12.5% (six months into a four-year schedule, before the cliff, often 0%),
the company recovers the rest and redeploys it.

## How Vesting Works: The 4-Year Schedule and 1-Year Cliff

![Four-year founder vesting schedule with a one-year cliff, milestone by milestone](
https://i0.wp.com/clearlegaltips.com/wp-content/uploads/2026/06/cv2979-03-cliff-
schedule.jpg?w=1290&ssl=1)

The market standard for founder vesting in 2026 remains a **four-year schedule with
a one-year cliff**:

 * **Four-year schedule:** equity vests in equal monthly increments over 48 months,
   roughly 2.08% of the grant per month.
 * **One-year cliff:** nothing vests for the first 12 months. Reach the anniversary
   and 25% vests at once; leave at month 11 and you keep zero. The cliff filters
   out founders who bail in the fragile first year.
 * **Monthly thereafter:** the remaining 75% vests month by month until you are 
   fully vested at month 48.

  |  Time with the company |  Vested |  If you leave then |  
   |  0–11 months |  0% (before the cliff) |  Company reclaims the entire grant |  
 |  12 months (cliff) |  25% |  You keep 25%; company reclaims 75% |  
 |  24 months |  50% |  You keep half |  
 |  36 months |  75% |  You keep three-quarters |  
 |  48 months |  100% |  Fully vested; nothing to reclaim |

Teams sometimes credit a founder with a few months of vesting on day one to recognize
real pre-incorporation work, such as months spent building the prototype. That is
reasonable; keep it modest and put it in writing. A founder claiming two years of“
sweat equity” credit for a weekend of work is a signal worth heeding before you 
sign anything.

## Reverse Vesting: Why Founder Shares Work Backwards

One term of art worth decoding: founder vesting is usually **reverse vesting**. 
Employees with stock options earn the _right to buy_ shares as they vest. Founders
receive all their shares up front on day one, which matters for taxes and voting,
but the company holds a repurchase right over the unvested portion that _lapses_
on the same 4-year/1-year schedule. Same economics, opposite mechanics: you own 
the shares, and the company’s right to take back the unearned ones melts away month
by month. This is why the tax question in the 83(b) section below exists at all,
and why the agreement below is written as a repurchase right rather than a share
grant schedule.

## How to Split Founder Equity Fairly

![Four factors for splitting founder equity: IP, time, role, cash](https://i0.wp.
com/clearlegaltips.com/wp-content/uploads/2026/06/cv2979-04-equity-split-factors.
jpg?w=1290&ssl=1)

Vesting decides _when_ you earn shares; the split decides _how many_. The instinct
is 50/50 to avoid an awkward conversation, but an even split chosen to dodge a hard
talk breeds more resentment than an honest, slightly unequal one. Work through four
factors:

 * **Idea and IP.** The idea alone is worth less than founders think; execution 
   is everything. But a founder bringing a working prototype, a patent, or a proprietary
   dataset has contributed real capital, and the IP assignment clause below is how
   the company actually captures it.
 * **Time commitment and risk.** Full-time from day one is a different bet than 
   nights-and-weekends “until we raise.” Equity should reflect risk taken, not hours
   promised.
 * **Role and replaceability.** The people the company cannot survive without, typically
   whoever builds the product and whoever sells it, justify larger shares.
 * **Cash invested.** A founder writing a real check is buying equity with money,
   not sweat. Recognize it separately, often as a priced share purchase or a convertible
   note, rather than silently inflating their founder percentage.

Then write the reasoning down, not only the numbers. When someone questions the 
math in year two, and someone will, a one-paragraph rationale inside the signed 
agreement ends the argument before it starts.

## Copy-Paste Template: Co-Founder Vesting & Equity Split Agreement

![Copy-paste co-founder vesting and equity split agreement template](https://i0.
wp.com/clearlegaltips.com/wp-content/uploads/2026/06/cv2979-05-template.jpg?w=1290&
ssl=1)

Replace the bracketed items, delete what does not apply, and read the note at the
end about entity type. The downloadable versions above mirror this text.

**CO-FOUNDER VESTING AND EQUITY SPLIT AGREEMENT**

This Agreement is entered into as of [DATE] by and among **[COMPANY NAME], Inc.**,
a [STATE] corporation (the “Company”), and the undersigned founders: [FOUNDER 1 
NAME], [FOUNDER 2 NAME][, and [FOUNDER 3 NAME]] (each a “Founder”).

**1. Equity Split.** The Company has issued to the Founders the following shares
of common stock, which the Founders agree reflect their respective contributions
of intellectual property, services, risk, and capital:

[FOUNDER 1 NAME]: [NUMBER] shares ([XX]%). Basis: [e.g., full-time from incorporation;
built the prototype and assigns it under Section 7].
[FOUNDER 2 NAME]: [NUMBER] 
shares ([XX]%). Basis: [e.g., full-time from incorporation; leads sales and contributed
$[AMOUNT] documented separately].[Additional founders as needed.]

**2. Issuance; Purchase Price.** Each Founder has purchased their shares at $[PRICE]
per share under a restricted stock purchase agreement of even date. The shares are
issued and outstanding as of the date above, subject to the Company’s Repurchase
Right in Section 4.

**3. Vesting.** Each Founder’s shares vest as follows: no shares vest until the 
first anniversary of [VESTING COMMENCEMENT DATE], on which 25% of the shares vest;
the remaining 75% vest in 36 equal monthly installments thereafter, so that all 
shares are vested four years after the commencement date, provided the Founder remains
in continuous service to the Company. [OPTIONAL: In recognition of pre-incorporation
work, [FOUNDER NAME] is credited with [NUMBER] months of vesting as of the commencement
date.]

**4. Repurchase Right.** If a Founder’s service to the Company ends for any reason,
the Company may repurchase all unvested shares at the lower of (a) the original 
purchase price and (b) the then-current fair market value, exercisable for [90] 
days after the service end date. Vested shares are not subject to this Section.

**5. Acceleration.** If a Change in Control occurs and, within [12] months after
it, a Founder’s service is terminated by the Company (or successor) without Cause
or the Founder resigns for Good Reason (each as defined in Exhibit A), [100]% of
that Founder’s unvested shares vest immediately (“double-trigger” acceleration).

**6. Leaver Terms.** A Founder terminated for Cause, or who breaches Sections 7–
8, forfeits unvested shares and the Company may repurchase their vested shares at[
fair market value / the original purchase price] within [90] days. A Founder who
departs otherwise keeps vested shares subject to Section 8.

**7. Assignment of Intellectual Property.** Each Founder hereby assigns to the Company
all right, title, and interest in all inventions, works of authorship, code, designs,
and other intellectual property made or conceived by the Founder that relate to 
the Company’s business, whether created before or after incorporation, and will 
execute documents reasonably needed to perfect the Company’s ownership.

**8. Transfer Restrictions; Right of First Refusal.** No Founder may sell, pledge,
or transfer shares without first offering them to the Company, then to the other
Founders, on the same terms (the “Right of First Refusal”), except transfers to 
a revocable trust for estate planning that remain subject to this Agreement.

**9. Decision-Making; Deadlock.** Day-to-day roles: [FOUNDER 1: e.g., product/CEO;
FOUNDER 2: e.g., sales/COO]. The matters listed in Exhibit B (fundraising, budgets
over $[AMOUNT], hiring officers, selling the company) require [unanimous/majority]
Founder approval. If the Founders deadlock on an Exhibit B matter for [30] days,
the question is decided by [the board’s independent director / a mediator selected
under Exhibit B].

**10. Section 83(b) Elections.** Each Founder acknowledges that shares subject to
Section 4 are restricted property under 26 U.S.C. §83, and agrees to file a timely
election under §83(b) within 30 days after their share purchase and to deliver a
copy to the Company.

**11. General.** This Agreement is governed by [STATE] law, is the entire agreement
of the parties on its subject, may be amended only in a writing signed by all parties,
and may be executed in counterparts, including by electronic signature.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.

_________________________ [FOUNDER 1 NAME], Founder   Date: _______
_________________________[
FOUNDER 2 NAME], Founder   Date: ________________________________ [COMPANY NAME],
Inc., by its authorized officer   Date: _______

**Entity-type note, read before using:** this template assumes a corporation issuing
restricted stock, the structure investors expect and the one the 83(b) election 
is built for. In practice the mechanics live across a small document set: this agreement,
per-founder restricted stock purchase agreements, and the company’s [bylaws](https://clearlegaltips.com/corporate-bylaws-template-2026/).
If you are an LLC, ownership is in units governed by your [operating agreement](https://clearlegaltips.com/llc-operating-agreement-template-single-and-multi-member/),
vesting is drafted as unit-based provisions there, and the tax treatment differs;
have an attorney adapt it rather than swapping the word “shares” for “units.”

## Clauses Investors Will Check For

![Key clauses in a co-founder agreement: repurchase, IP assignment, ROFR](https://
i0.wp.com/clearlegaltips.com/wp-content/uploads/2026/06/cv2979-06-key-clauses.jpg?
w=1290&ssl=1)

 * **Share counts and percentages, both.** Percentages drift as you issue new shares;
   the share count is the anchor.
 * **The repurchase right and its price.** Unvested shares go back at the lower 
   of cost or fair market value; that “lower of” is what keeps a departing founder
   from profiting on unearned equity.
 * **IP assignment with “hereby assigns.”** Present-tense assignment language transfers
   ownership now; “agrees to assign” is a promise that requires a second document
   later. Diligence teams read for this distinction, and it is the same rule that
   governs any [IP assignment](https://clearlegaltips.com/ip-assignment-agreement-template/):
   no signed writing, no transfer.
 * **Right of first refusal.** Keeps founder shares from wandering to outsiders 
   without the company and co-founders getting first shot.
 * **Good-leaver/bad-leaver terms.** Different outcomes for a founder who departs
   cleanly versus one terminated for cause.
 * **Confidentiality.** Usually handled in a separate [NDA](https://clearlegaltips.com/free-non-disclosure-agreement-nda-template/)
   or confidentiality agreement signed alongside this one.
 * **A deadlock-breaker for 50/50 teams.** A casting vote, an independent director,
   or a buyout mechanism; without one, an even split can freeze the company. (For
   established companies, the buyout mechanics live in a [buy-sell agreement](https://clearlegaltips.com/free-buy-sell-agreement-template-business-buyout-2026/);
   this clause is the startup-stage version.)

## Acceleration: Single Trigger vs Double Trigger

![Single trigger versus double trigger acceleration in founder vesting](https://
i0.wp.com/clearlegaltips.com/wp-content/uploads/2026/06/cv2979-07-acceleration.jpg?
w=1290&ssl=1)

Acceleration clauses speed up vesting when something big happens, usually an acquisition.
The two flavors behave very differently:

 * **Single trigger:** vesting accelerates the moment the company is acquired. Founders
   like it; acquirers dislike it, because the people they are buying can cash out
   and leave the day the deal closes.
 * **Double trigger:** vesting accelerates only if two things happen: the company
   is acquired _and_ the founder is terminated without cause (or resigns for good
   reason) within a set window, often 12 months. This is the investor-friendly market
   standard because it protects founders from being fired post-close without letting
   them walk on day one.

For most early-stage teams, double-trigger on 100% of unvested shares is the sensible
default, and it is what the template above uses. Single-trigger is rarely worth 
the fight it invites in diligence.

Building out the rest of the paperwork around this agreement? LawDepot’s business
library has fill-in-the-blank NDAs, employment offers, and contractor agreements
for the documents founders sign next.

[Browse LawDepot’s Business Documents →](https://clearlegaltips.com/go/lawdepot-business)

## The 83(b) Election: 30 Days, No Extensions

![83(b) election 30-day deadline and Form 15620 online filing](https://i0.wp.com/
clearlegaltips.com/wp-content/uploads/2026/06/cv2979-08-83b-deadline.jpg?w=1290&
ssl=1)

Here is the deadline that matters more than anything else on this page. When you
receive stock subject to vesting, the default tax rule taxes you as the shares _vest_:
each vesting month, the spread between what you paid and what the stock is then 
worth is ordinary income, on shares you cannot sell. If the company grows, that 
is a recurring tax bill that compounds for four years.

An **83(b) election** flips the default. You elect to be taxed once, now, on the
value of all the shares at grant, when a founder’s stock is typically worth a fraction
of a cent per share, so the tax today is at or near zero, and all later growth waits
for sale, generally as capital gain. The statute is blunt about the window: the 
election “shall be made not later than 30 days after the date of such transfer” (
[26 U.S.C. §83(b)(2)](https://www.law.cornell.edu/uscode/text/26/83)). Thirty calendar
days from the share purchase, not from when you remember. There is no extension 
and no late-filing relief.

The mechanics got easier recently, which most older guides miss. The IRS released**
Form 15620**, a standardized 83(b) election form, in late 2024, and [since mid-2025 it can be filed online](https://www.irs.gov/forms-pubs/update-to-the-2024-publication-525-for-section-83b-election)
through the IRS’s forms portal with an ID.me login; paper filing by mail still works
too. Whichever route you use: file within the 30 days, keep the confirmation (or
send paper by certified mail and keep the receipt), and give a copy to the company,
which the template’s Section 10 requires. Calendar it the day you sign the stock
purchase, and treat the calendar entry like a court date.

## How to Fill Out the Template

![Steps to complete the co-founder vesting and equity split agreement](https://i0.
wp.com/clearlegaltips.com/wp-content/uploads/2026/06/cv2979-09-fill-steps.jpg?w=
1290&ssl=1)

 1. **Company and founder details.** Legal entity name, state, each founder’s full 
    legal name.
 2. **The split, with reasons.** Share counts, percentages, and a one-line basis for
    each founder in Section 1; that rationale is the argument-ender.
 3. **Vesting dates.** Commencement date (incorporation or each founder’s start), 48-
    month period, 12-month cliff, any documented pre-incorporation credit.
 4. **Repurchase and leaver terms.** Confirm the “lower of cost or FMV” price for unvested
    shares and the [90]-day exercise window.
 5. **Acceleration.** Double trigger, percentage, and the post-closing window.
 6. **Roles and deadlock.** Fill Exhibit B’s reserved matters and pick a deadlock-breaker
    you would actually accept.
 7. **Sign, issue, then file.** Everyone signs (electronic signatures are fine, and
    [legally valid](https://clearlegaltips.com/are-electronic-signatures-legal-the-esign-act/)),
    the company issues the shares, and every founder files their 83(b) within 30 days.

Many founders complete the template to organize the decisions, then pay for an hour
of startup-attorney review before signing. That sequencing keeps legal spend low
while putting professional eyes on the sections a lead investor will scrutinize.

## Common Mistakes to Avoid

![Common co-founder equity mistakes: no vesting, missed 83(b), vague IP](https://
i0.wp.com/clearlegaltips.com/wp-content/uploads/2026/06/cv2979-10-mistakes.jpg?w
=1290&ssl=1)

 * **No vesting at all.** The cardinal sin; fix it before you raise or hire.
 * **Missing the 83(b) window.** Thirty days, statutory, unforgiving. File it the
   same week you sign.
 * **Vague IP assignment.** Without “hereby assigns” language covering pre-incorporation
   work, the company may not own its own product.
 * **50/50 with no tie-breaker.** Even splits need a deadlock mechanism, or the 
   first serious disagreement becomes structural.
 * **Verbal promises.** “We’ll figure out equity later” is how co-founder relationships
   end up in litigation. Paper it while everyone still likes each other.
 * **Signing a template nobody read.** This document governs who owns the company;
   understand every bracket you fill.

## When to Bring in a Lawyer

A solid template handles the standard case: two to four founders, a clean cap table,
conventional 4-year/1-year vesting. Bring in a startup attorney when the facts get
heavier: a founder investing meaningful cash, pre-existing IP with unclear ownership,
international founders, a founder still employed elsewhere (their employer may have
claims on their work), or a priced round on the horizon. An hour of review is cheap
against an equity dispute, and cheaper still against re-papering a broken cap table
in diligence. Use the template to do the thinking; spend the legal budget on review,
not on reinventing standard clauses.

## Frequently Asked Questions

### What is the standard founder vesting schedule?

Four years with a one-year cliff: nothing vests for 12 months, 25% vests at the 
anniversary, and the remaining 75% vests monthly until month 48. It is the structure
investors expect to see on a founder cap table.

### Should co-founders always split equity 50/50?

Not automatically. An even split is right when contributions, risk, and roles genuinely
match, but choosing it to avoid a hard conversation usually backfires. Base the 
split on IP, time commitment, role, and cash, and write the reasoning into the agreement.

### What happens to a co-founder’s shares if they leave early?

The company repurchases or reclaims the unvested portion under the repurchase right.
A founder leaving at 18 months on a standard schedule keeps roughly 37.5% of the
grant; the rest returns to the company for investors and new hires.

### What is reverse vesting?

The founder version of vesting: you receive all shares up front, and the company
holds a repurchase right over the unvested portion that lapses monthly on the vesting
schedule. Employees’ options vest forward; founders’ shares un-restrict backward.
The economics match, but the day-one ownership is why the 83(b) deadline exists.

### What is an 83(b) election and why does it matter?

A one-page IRS election to be taxed on restricted stock at grant, when founder shares
are worth nearly nothing, instead of at each vesting date as the value grows. It
converts future appreciation into capital gain and avoids annual phantom income,
but only if filed within 30 days of the share transfer.

### Can I file the 83(b) election online?

Yes. The IRS standardized the election as Form 15620 in late 2024 and opened online
filing in mid-2025 through its forms portal with an ID.me login. Paper filing by
mail still works. Either way the 30-day deadline is unchanged, and you should keep
the confirmation and give a copy to the company.

### Do I need a lawyer to use a co-founder agreement template?

For a standard two-to-four-founder startup, the template plus a short attorney review
is the cost-effective path. Go straight to counsel when there is significant cash
investment, pre-existing or employer-entangled IP, international founders, or an
imminent priced round.

The vesting agreement is one document in the founder stack. For the companion paperwork,
NDAs, employment offers, and business contracts, LawDepot’s business library covers
the standard documents in fill-in-the-blank form.

[Browse LawDepot’s Business Documents →](https://clearlegaltips.com/go/lawdepot-business)

## The Bottom Line

Founder equity has two failure modes: the co-founder who leaves with half the company,
and the tax bill that compounds because nobody filed a one-page election. Both are
solved in a week. Agree on a split you can defend out loud, put every founder on
4-year/1-year reverse vesting with a repurchase right, double-trigger acceleration,
hereby-assigns IP language, and a deadlock-breaker, then file each 83(b) within 
30 days, online via Form 15620 or by certified mail. Sign it while everyone is still
friends. That is the entire trick: the document only works if it exists before you
need it.

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**Legal Disclaimer:** This article is general information, not legal advice. ClearLegalTips
is not a law firm and does not provide legal representation. Laws vary by state 
and change over time. For guidance on your specific situation, consult a licensed
attorney in your jurisdiction.

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