Resources for insight and
inspiration
Guides
Insights
Understanding Acceleration: Protecting Startup Talent Through Vesting Strategies
Acceleration is a mechanism in equity compensation that allows employees or founders to vest their stock options faster than the original schedule. It is most often triggered by significant events like a company acquisition. Acceleration ensures that key contributors are fairly compensated during major transitions and protects the value of their equity.
Vesting Schedules: The Strategic Foundation of Startup Equity Compensation
For both founders and employees, vesting schedules are more than a technical requirement. They are a strategic tool that determines how equity is earned, how long employees remain motivated, and how well a startup protects its ownership structure. A well-designed vesting schedule can strengthen retention, build loyalty, and align incentives between the company and its team.
Equity Incentive Plans / Equity Stock Option Plans
For startup founders, an option pool is more than a technical detail - it’s a strategic tool. The size, structure, and timing of your equity incentive plan can determine your ability to attract top talent, align incentives, and keep your company’s cap table clean for future investors.
Option Pools and Acquisitions: Navigating the Equity Landscape
When a startup is acquired, the treatment of its option pool becomes a critical factor for both founders and employees. Option pools influence retention, compensation, and how value is distributed during a merger or acquisition. Understanding what happens to these equity instruments helps founders negotiate better terms and employees make informed financial decisions.
FAQs
Open allWhy do investors care about these agreements?
Because without them, your startup may not legally own its core technology - a major risk in funding, acquisitions, or IPOs.
Are invention assignment agreements enforceable everywhere?
Generally yes, but enforceability can depend on state law. Some states restrict how broadly employers can claim ownership, so tailoring language matters.
Do contractors need to sign invention assignment agreements?
Yes. Contractors often create code, designs, or strategies, and without an agreement, they may legally own the IP.
What’s the difference between a CIIAA and a PIIAA?
They serve the same function - assigning inventions to the company and protecting confidentiality. The terminology varies by company or industry.
Should contractors and employees sign NDAs?
Yes. Pair NDAs with confidentiality and IP assignment agreements to ensure ownership of work product and protection of sensitive data.
Are NDAs enforceable?
Yes, but courts often scrutinize them. NDAs that are too broad or vague are harder to enforce.
How long should an NDA last?
Two to five years is standard. Trade secrets may be protected indefinitely if defined clearly.
Do investors usually sign NDAs?
Most venture capitalists won’t sign NDAs at the pitch stage. However, some strategic investors or partners may sign if sensitive technical information is involved.
Do we need a formal open source policy?
Yes. Even a short policy clarifying what licenses are acceptable and requiring license checks before use can protect your company from major risks.
Is open source safe for SaaS companies?
It depends. Copyleft licenses like AGPL may apply even if you don’t distribute your code. Always check terms before using them in your backend.
What happens if we violate an open source license?
You could face legal action, be forced to release your proprietary code, or lose investor confidence. Compliance is critical.
Can my startup use open source code in a commercial product?
Yes, but it depends on the license. Permissive licenses (like MIT or Apache 2.0) allow it, while copyleft licenses (like GPL) may require you to open source your own code.
How can startups build trust around privacy?
Be transparent, respond quickly to user requests, and show that you protect data. Investors and customers reward startups that treat privacy as a priority, not an afterthought.
Do I need consent for all data I collect?
Not always. Consent is required for marketing emails, cookies, and sensitive data. Other legal bases, like contracts or legitimate interest, may apply.
What’s the most important privacy step to take early?
Start with a clear Privacy Policy and limit the data you collect. These two actions cover many compliance basics and set a strong foundation.