What it is: Vesting acceleration refers to the acceleration of equity or stock vesting for an individual, allowing them to receive ownership rights ahead of the original schedule. It is typically triggered by specific events or circumstances outlined in the equity agreement.
Why it is essential: Vesting acceleration can incentivize employees, founders, or investors by offering them accelerated ownership rights in certain situations, such as a change of control or company performance milestones. It can help retain key stakeholders and align their interests with the startup's long-term success.
Formulas: There are no specific formulas associated with vesting acceleration.
How to use it in the context of startups: Startups can use vesting acceleration as a retention tool or incentive mechanism for key employees, founders, or investors. By incorporating vesting acceleration provisions in equity agreements, startups can motivate stakeholders and ensure their continued commitment to the company's growth.