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Reverse Vesting




Everyone's nightmare scenario is that the day after the investment, one of the Founders skips off to another project or becomes unable to perform their duties and all need to find a replacement; such new senior employee will therefore be able to work to increase the value, including the value of the already vested shares.

For startups, making their shares subject to reverse vesting protects all involved if one of the vital employees changes their mind or becomes unable to perform their duties. The company's shares shall be earned as often as mentioned and agreed in the Term Sheet. This means that if, for any reason, a founder gives up on the team after some time, the investors have the right to buy back a part of the shares from them at nominal value to re-allocate such shares to a new founder.