Founder equity terms

Atlas defaults to industry-standard founder equity vesting terms. However, you can customize your vesting period and vesting start dates, and choose whether to include a vesting cliff.

Standard equity terms

As a founder, you need to understand the following equity terms:

• Vesting: The process by which you gradually gain ownership of assets such as company equity over time, rather than receiving them all at once.
• Vesting period: The total length of time over which you earn your founder equity. If you leave before the end of the vesting period, you only keep the stock that has already vested.
• Vesting cliffs: The date before which no equity vests. If you leave before the cliff date, you won’t receive any stock.
• Vesting start date: The date when your vesting period begins.

Most founders set up their companies with a four-year vesting period and a one-year cliff, with a vesting start date set as the date of incorporation. All Atlas founder equity vests monthly. For example, with a four-year vesting period, founders receive 1/48 of their total grant each month.

Here’s what these standard terms mean for your startup:

• Four-year vesting period: Your founder equity vests in monthly increments over four years.
• One-year cliff: No equity vests until you have been with the company for a full year. With a four-year vesting period, 25% of shares vest immediately on the cliff date.
• Vesting start date as day of incorporation: Vesting begins the day your company is incorporated.

Select your equity terms

As a C Corp founder, you can select equity vesting terms that differ from the industry standard.

You can select your equity terms for your founding team in the Atlas application:

1. In your Atlas application in the Dashboard, navigate to the Equity terms page.
2. Select the equity vesting period for your entire founding team.
3. For each founder, choose between a one-year cliff or no cliff. However, a one-year cliff is typically the industry standard and preferred by investors.
4. Select a vesting start date up to 6 months before the current date for each founder.
5. Review selections on the application summary page before you submit your application.

Vesting period

The vesting period determines how long it takes for your founder equity to vest in full. Atlas allows you to select a vesting period that applies to all founders of the company:

• 4 years (default)
• 5 years
• 6 years

You might extend the vesting period to increase founder retention and signal long-term commitment to investors, especially in industries with longer development timelines.

Vesting cliff

A vesting cliff is an initial period during which no shares vest.

You can use Atlas to customize vesting cliffs for each founder:

• One-year cliff (default): You must stay for one year before any shares vest. For example, in a four-year vesting schedule, after this initial one-year period, 25% of shares vest immediately, with the remainder vesting monthly.
• No cliff: Shares begin vesting immediately according to the monthly vesting schedule, without a waiting period.

Founders might remove the cliff because the team wants to be rewarded for their work regardless of how long they remain with the startup. However, a one-year cliff is the industry standard and is generally preferred by investors.

Vesting start date

The vesting start date determines when your vesting period begins.

You can use Atlas to customize the vesting start date for each founder:

• The date of incorporation (default)
• Up to 6 months before the date of incorporation

You might set a vesting start date prior to incorporation to acknowledge work completed for the startup before it was officially incorporated.

Limitations

Atlas doesn’t support equity customization beyond the options listed above. For questions and feedback on customizations, contact us at atlas-feedback@stripe.com.