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Operator guideAt incorporation, founders typically purchase stock at par value subject to vesting. Three companion documents matter: the Stock Purchase Agreement, the IP Assignment, and the 83(b) election.
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Founder Stock Purchase Agreement Guide · File.Business

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.

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Key facts

Start here.

Key fact
Purchase at par

Typically $0.0001/share. Near-zero cost for founder.

Key fact
Vesting

Standard 4 years with 1-year cliff. 25% vest at year 1; monthly thereafter.

Key fact
Repurchase right

Company may repurchase unvested shares at original price upon termination.

Key fact
IP assignment

Founder assigns all pre-existing IP related to business.

Key fact
83(b)

File within 30 days of stock issuance.

In depth

The full picture.

01

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).

02

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).

03

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.

04

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.

05

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.

06

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.

07

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).

08

Representations

Founder represents: authority to enter; no conflicts with prior employer agreements; accurate disclosure of prior IP retained; full and accurate information.

09

Common Mistakes

Skipping IP Assignment. Missing 83(b) deadline. Not setting vesting (investors require). Inconsistent vesting dates across co-founders. Unclear acceleration provisions.

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FAQ

Common questions.

Why par value pricing?
Minimizes founder out-of-pocket. Tax basis equal to purchase price; 83(b) makes all appreciation capital gain at sale.
What is the standard vesting?
4 years with 1-year cliff. 25% at year 1; monthly thereafter.
Can vesting be different?
Yes. Some companies use 3-5 year vesting. Investors often standardize at 4 years.
Do founders need vesting?
Investors require it. Without vesting, a founder leaving early walks away with full ownership.
What is double trigger acceleration?
Equity vests on acquisition AND termination without cause within a defined period. Founder-friendly.
Should I include single trigger?
Single trigger is unusual; acquirers will resist because they want to keep founders post-close.
What about pre-incorporation work?
Vesting start date can be earlier than incorporation to credit pre-incorporation contribution.
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