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Guides
Insights
Management Rights Letter: Granting Institutional Investors Oversight Access
When startups take money from venture capital funds subject to ERISA or similar regulations, those funds need a special document: the Management Rights Letter (MRL). This short but powerful agreement ensures the investor has sufficient rights to “manage” their investment, helping them comply with legal requirements.
Indemnification Agreement: Personal Protection for Startup Directors and Officers
When startup leaders make tough calls - hiring, spending, pivoting - they expose themselves to personal liability. The Indemnification Agreement serves as a legal shield, protecting directors and officers against lawsuits, claims, and costs incurred while serving the company.
ROFR and Co-Sale Agreement: Managing Share Transfers While Preserving Cap Table Control
In venture-backed startups, control of the cap table is critical. The Right of First Refusal and Co-Sale Agreement (ROFR/Co-Sale) helps founders and investors maintain that control by regulating how shares are transferred - particularly when founders, early employees, or other major holders want to sell.
Voting Agreement: Aligning Shareholder Power in Key Company Decisions
While founders often assume they’ll control their company post-funding, the Voting Agreement tells a more nuanced story. This document outlines how shareholders agree to vote their shares on critical company matters, including board elections and future financing approvals.
FAQs
Open allNot always. While acceleration is common, especially at the executive level, it must be specifically negotiated and documented in the equity agreement.
Yes. Founders, executives, and employees can all negotiate acceleration clauses, though terms often vary by role and seniority.
It ensures employees remain motivated and engaged after an acquisition, protecting company value and reducing turnover risk.
Single trigger accelerates vesting upon one event, such as an acquisition, while double trigger requires both an acquisition and a termination without cause.
No. Vesting schedules can also apply to contractors, advisors, and executives who receive equity compensation under the company’s equity incentive plan.
Yes. While time-based vesting is standard, many startups use performance-based or hybrid structures to align equity with specific goals or milestones.
A cliff ensures employees demonstrate commitment and cultural fit before receiving ownership. It also protects the company from granting equity to short-term hires.
The standard structure is a four-year schedule with a one-year cliff, followed by monthly or quarterly vesting for the remaining equity.
Ideally at incorporation. Waiting too long can create dilution challenges and complicate negotiations with investors.
An EIP can include stock options, restricted stock, RSUs, and other equity-based awards, giving flexibility to tailor compensation.
Yes. Even small teams benefit from setting aside equity early. Without one, you risk complications in hiring, fundraising, and future compliance.
Most early-stage startups set aside 10–20% of total equity, but the right size depends on your growth plan, hiring needs, and investor input.
Yes. A larger pool can dilute per-share value, which impacts how acquisition proceeds are distributed among shareholders and option holders.
Founders can negotiate for vesting acceleration, retention bonuses, or favorable conversion terms to ensure employees benefit from the deal.
Not always. Depending on the agreement, unvested options may continue vesting, accelerate, or be canceled and replaced with new grants.
Option pools may either remain under the existing plan with the same vesting schedules or be converted into the acquiring company’s plan under a conversion ratio.