Key Takeaways
- Founder vesting puts founder shares on a schedule, most often four years with a one-year cliff, so a co-founder who leaves early does not walk away with a full stake
- Single-trigger acceleration vests unvested shares on one event, usually a sale of the company, with no termination required
- Double-trigger acceleration needs two events: a change of control and an involuntary termination without cause (or a resignation for good reason) within a set window
- Double trigger is the more common market term, because single trigger removes the acquirer's main tool for retaining the team after a deal
- Founders who receive restricted stock subject to vesting should file a Section 83(b) election within 30 days of the transfer; the deadline cannot be extended
- Acceleration counts toward the Section 280G golden parachute test; a payment of 3x or more of base pay can trigger a 20% excise tax, which private companies can often avoid with a 75%+ shareholder vote
- At seed, a reasonable founder position is double trigger, 100%, with a 12-month window and tight definitions of cause and good reason
Single-trigger acceleration vests a founder's unvested shares the moment the company is sold. Double-trigger acceleration vests them only when the company is sold and the founder is then fired without cause, or resigns for good reason, within a defined window. Double trigger is the more common term because it protects founders without making the team unretainable for a buyer.
This guide is general information, not legal or tax advice. Vesting and acceleration live in your stock purchase agreements and board approvals, and counsel should draft them.
What is founder vesting and why do investors require it?
Founder vesting gives the company the right to buy back a departing founder's unvested shares, usually at cost, so equity tracks the work actually done.
Founders typically buy their stock outright at formation for a nominal price. Vesting is layered on top as a repurchase right: if a founder leaves before the shares vest, the company can repurchase the unvested portion. Economically it behaves like earning shares over time, which is why it is often called reverse vesting.
The common structure:
Investors care because a cap table where a departed co-founder holds 30% of the company with no obligation to keep working is a structural problem. The NVCA model legal documents, which many US venture rounds start from, include vesting terms in the model term sheet and a covenant on employee stock vesting in the investor rights agreement. If your founders are not on a vesting schedule when you raise a priced round, expect the lead to ask for one.
Will investors make founders re-vest?
Sometimes, at a priced round, especially if founders own fully vested stock or the company is young.
A vesting reset puts some already-vested shares back on a schedule. The usual negotiation is over how much credit founders get for time served. A SAFE round generally does not trigger this: the Y Combinator SAFE is a short instrument with no vesting terms. The question tends to come up at the first priced round, alongside the other cap table cleanup items covered in our guide to cleaning up your cap table before a seed round.
What is single-trigger acceleration?
Single-trigger acceleration vests some or all unvested shares on a single event, almost always a change of control, whether or not the founder keeps their job.
Cooley GO's glossary defines acceleration as the faster vesting of shares on a specified event, and treats a change of control alone as the single-trigger case. When the deal closes, the founder's unvested shares vest immediately.
Why founders want it:
Why it is uncommon:
Partial single trigger is the common compromise where single trigger exists at all: for example, 25% or 50% of unvested shares accelerate at closing and the rest stays on the schedule.
What is double-trigger acceleration?
Double-trigger acceleration vests unvested shares only when two things happen: a change of control, then a qualifying termination within a set period after it.
Cooley GO notes that double-trigger acceleration, triggered by an involuntary termination without cause following a sale, is the more common form. The two triggers:
Double trigger protects the founder from the scenario that matters: a buyer acquires the company, fires the founder, and the unvested shares disappear. It also leaves the buyer with a reason for the founder to stay, which keeps the company sellable.
Single vs double trigger: how do they compare?
Double trigger trades certainty at closing for a cleaner deal; single trigger does the reverse.
Which definitions decide whether double trigger works?
Cause, good reason and the protection window decide whether double trigger protects anyone; the headline percentage matters less.
A double-trigger clause with a broad cause definition is close to worthless. Read these closely:
Why does Section 83(b) matter for vested founder stock?
Because without a timely 83(b) election, a founder is taxed on the value of shares as they vest, and the deadline is 30 days with no extension.
Under Section 83 of the Internal Revenue Code, stock subject to a substantial risk of forfeiture is generally taxed when it vests, at its value on that date. For a successful startup, that value can be many times what the founder paid.
An 83(b) election lets the founder include the stock in income at the time of transfer instead, when the spread between price paid and value is usually zero. The Treasury regulation at 26 CFR 1.83-2 requires the election to be filed not later than 30 days after the date the property was transferred. The IRS publishes Form 15620 for making the election, and Cooley GO's 83(b) entry summarizes the mechanics.
Practical points:
How does acceleration interact with Section 280G?
Accelerated vesting on a sale can count as a golden parachute payment, which can trigger a 20% excise tax for the founder and a lost deduction for the company.
Section 280G treats payments contingent on a change of control as parachute payments when their total equals or exceeds 3 times the individual's base amount, roughly average annual pay over recent years. The value of accelerated vesting is part of that calculation. Excess parachute payments are not deductible for the company, and Section 4999 imposes a 20% tax on the recipient.
For low-salary founders, the 3x threshold is easy to cross. Private companies have a common escape: 280G exempts payments approved by shareholders holding more than 75% of the voting power, after adequate disclosure, with the affected individuals' shares excluded from the vote. Acquirers usually run this vote before closing. Know that it exists before you agree to a cutback clause.
What should founders negotiate at seed?
Ask for double-trigger, 100% acceleration with a 12-month window and narrow cause and good-reason definitions; trade away single trigger early if it is costing you elsewhere.
A workable seed-stage position:
Many investors accept that package without a fight. Spend negotiating capital on valuation, board composition and option pool size instead. Our walkthrough of closing a seed round from term sheet to wire shows where vesting sits in the closing documents, and the term sheet analyzer flags vesting and acceleration language in a draft.
For background reading, the Holloway Guide to Equity Compensation covers vesting, acceleration and 83(b) in depth.
Raise from investors who fit your terms
GIGABOOST matches founders against 340,000+ verified investors scored on 25 fit factors, then runs LinkedIn and email outreach from your own accounts. Growth is $499/mo.Frequently Asked Questions
What is the difference between single and double trigger acceleration?
Single-trigger acceleration vests a founder's unvested shares on one event, usually the sale of the company. Double-trigger acceleration requires two events: the sale and a termination without cause or a resignation for good reason within a set window after it. Double trigger is the more common market term.
Is double trigger acceleration standard for founders?
Double trigger is the more common form of acceleration in US venture deals, according to Cooley GO's definition of the term. Investors and acquirers accept it because it protects founders from being fired after a sale without removing the buyer's ability to retain the team. Full single trigger is uncommon and usually draws investor pushback.
What is a typical founder vesting schedule?
The most common founder vesting schedule is four years with a one-year cliff. Nothing vests in the first year, 25% vests on the first anniversary, and the remaining 75% vests monthly or quarterly over the next three years. Founders often negotiate credit for time already worked before the round.
Do founders need to file an 83(b) election?
Founders who receive stock that is subject to vesting should generally file a Section 83(b) election within 30 days of receiving it. Without the election, each vesting tranche is taxed at its value when it vests, which can be far above the price paid. The 30-day deadline in Treasury Regulation 1.83-2 cannot be extended.
Can acceleration trigger golden parachute taxes?
Yes. Under Section 280G, accelerated vesting on a sale counts toward parachute payments, and if total change-of-control payments reach three times the individual's base amount, the excess is subject to a 20% excise tax under Section 4999. Private companies can usually avoid this with approval from shareholders holding more than 75% of the voting power after adequate disclosure.