Founder stock purchase agreement. Vesting + IP + 83(b).
The Founder Stock Purchase Agreement is the foundational equity document for a C-Corp. Founders purchase stock at incorporation (typically at par value), subject to vesting and Company's right to repurchase unvested shares if the founder leaves. This guide walks through what to include, the 83(b) timing, and common mistakes.
Start here.
Typically $0.0001/share. Near-zero cost for founder.
Standard 4 years with 1-year cliff. 25% vest at year 1; monthly thereafter.
Company may repurchase unvested shares at original price upon termination.
Founder assigns all pre-existing IP related to business.
File within 30 days of stock issuance.
The full picture.
Structure of Founder Stock Purchase Agreement
Parties: Corporation and Founder. Identification of stock: number of shares, class (Common Stock typical), price per share (par value: $0.0001 typical). Total purchase price: number of shares × price (e.g., 1,000,000 shares × $0.0001 = $100).
Vesting Schedule
4-year vesting with 1-year cliff is standard. 25% of total shares vest at the first anniversary of the vesting start date. Remaining 75% vest monthly over the next 36 months (1/48th per month). Vesting start date often the incorporation date or earlier (if pre-incorporation work).
Repurchase Right
Company has the right to repurchase unvested shares at the original purchase price upon Founder's termination of service (for any reason, including death, disability, voluntary departure, termination for cause). Repurchase is typically within 90-180 days of termination.
IP Assignment
Built into the agreement or separate IP Assignment. Founder assigns to Company all IP related to the business: prior code, designs, ideas, inventions. Future IP made during engagement automatically assigned.
83(b) Election Acknowledgment
Agreement includes notice to Founder of 83(b) election option and 30-day filing requirement. Founder acknowledges receipt and responsibility to file independently with IRS.
Acceleration Provisions (optional)
Some agreements include acceleration on certain events. Single trigger: acquisition alone (unusual). Double trigger: acquisition AND termination without cause within 12-24 months post-close (standard for senior executives and some founders). Negotiable.
Confidentiality + Non-Solicitation
Standard provisions. Founder maintains confidentiality of Company information during and after service. Time-limited non-solicit of customers and employees (often 12 months post-termination).
Representations
Founder represents: authority to enter; no conflicts with prior employer agreements; accurate disclosure of prior IP retained; full and accurate information.
Common Mistakes
Skipping IP Assignment. Missing 83(b) deadline. Not setting vesting (investors require). Inconsistent vesting dates across co-founders. Unclear acceleration provisions.
Common questions.
Why par value pricing?
What is the standard vesting?
Can vesting be different?
Do founders need vesting?
What is double trigger acceleration?
Should I include single trigger?
What about pre-incorporation work?
Where stored?
Founder-ready foundation.
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Educational guide. Specific situations require professional legal and tax advice.
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