Fred has a post about option pools and their impact on valuation this morning. It’s a great post and will be very helpful to many folks without a doubt. I share the same point of view and it’s one of many reasons I like co-investing with USV.

Once you set up a pool there are some typical and different ways to structure the terms and rights associated with them. There are number of issues but for this post I want to talk about vesting & change of control.

Vesting

Vesting is important for retention but more importantly it allows the company to put the equity in the hands of the folks that have put in significant time & value into the company.

We have a vesting schedule with our team at Spark Capital and I’ve had a vesting schedule everywhere I’ve worked previously.

Since startups require a fairly long time to create & build the company most options have a 4 yr vesting schedule (or less especially if the team has been working for some time) with some sort of initial hurdle period - also known as a cliff.

The structure I’ve seen the most is one that requires the emplo