Founders who leave a startup before their equity has fully vested must relinquish the unvested portion to the startup or to their cofounders, thus either shifting it to the cofounders who will continue to build the value of the startup or allowing them to reallocate it to someone who will replace the drop-out founder. Vesting terms thus help serve as “golden handcuffs” that either give each founder financial incentives to continue contributing to the startup, rather than dropping out while keeping the full equity stake, or help protect the remaining founders when one founder leaves.
