In a GmbH, vesting is "reverse": founders own all their shares from day one, and the shareholder agreement gives the company or other shareholders an option to buy back unvested shares if a founder leaves. The standard is four years with a one-year cliff, plus good and bad leaver rules that set the buy-back price. The agreement must be notarised.
- German founders hold their shares immediately; vesting is a buy-back right, not a delayed grant.
- Market standard: 48 months with a 12-month cliff, monthly or quarterly after that.
- Good leaver (illness, termination without cause) usually keeps vested shares and gets fair value for the rest; bad leaver gets less.
- Because the buy-back is a share transfer obligation, the agreement needs notarisation.
- Investors expect vesting to restart or be confirmed at the first institutional round.
Why do investors insist on it?
Because of dead equity. If a co-founder leaves after six months and keeps a third of the company, every future investor and employee is diluted for someone who no longer contributes. Vesting ties ownership to time spent building, and it protects the founders who stay as much as the investors.
How does reverse vesting work in a GmbH?
German law does not have a direct equivalent of US restricted stock. Founders subscribe for their shares and own them. Vesting is built into the shareholder agreement instead:
- Each founder's shares are divided into vested and unvested portions over a schedule, usually 48 months.
- If a founder leaves, the other shareholders or the company get a call option on the unvested shares, and sometimes on part of the vested shares depending on the leaver category.
- The agreement sets the price for each case.
- Because founders commit to transfer shares if the option is exercised, the agreement must be notarised, like any obligation to transfer GmbH shares.
What do good and bad leaver clauses say?
| Leaver type | Typical triggers | Typical consequence |
|---|---|---|
| Good leaver | Illness, death, termination without cause, leaving after a long period | Keeps vested shares; unvested shares bought at fair value or a negotiated price |
| Bad leaver | Termination for cause, breach of non-compete, leaving voluntarily early | Unvested and sometimes vested shares bought at nominal value or the lower of nominal and fair value |
German courts review these clauses. Buying shares back at a price far below their value can be challenged if it is disproportionate, especially for vested shares. Keep the rules proportionate and get them drafted by counsel who does venture deals.
What about the cliff and acceleration?
The one-year cliff works as in the US: leave before 12 months and nothing has vested. Acceleration, meaning faster vesting on an exit or on termination without cause, is negotiable. "Double trigger" acceleration, where vesting speeds up only if there is both an exit and a termination, is the investor-friendly version.
Do you need vesting before you raise?
Yes, ideally from formation. Setting it up later is possible but awkward, because it means founders voluntarily agreeing to weaker rights. Investors will ask for it in the term sheet anyway, and they often restart the clock at the first institutional round.
What changes with a Delaware parent?
If you flip to Delaware, founder vesting usually moves to the parent as restricted stock under US law. Then the US tax question appears: see the 83(b) election for non-US founders. For employee equity in Germany, which works differently again, read ESOP vs VSOP in Germany.
What does a vesting schedule look like in numbers?
| Months since start | Vested share of a founder's stake |
|---|---|
| 0–11 | 0% (cliff) |
| 12 | 25% |
| 24 | 50% |
| 36 | 75% |
| 48 | 100% |
A founder holding 30% who leaves as a good leaver after 18 months keeps 37.5% of their stake (about 11.25% of the company) and the rest can be bought back under the agreement's terms.
What else belongs in the founder agreement?
- Roles and time commitment.
- Decision-making rules and deadlock resolution.
- IP assignment to the company.
- Non-compete and non-solicitation, within German legal limits.
- What happens on death or long-term illness.
How do you raise vesting with co-founders?
Frame it as standard governance that protects everyone, including the founder who stays. Investors will ask for it anyway. Setting it up at formation, when no one is leaving, avoids the conversation ever feeling personal. If you are moving to Delaware, align it with the flip.
Frequently asked questions
Is founder vesting legal in Germany?
Yes. It is implemented as reverse vesting through call options in a notarised shareholder agreement rather than as restricted stock.
What is the standard vesting schedule for German founders?
Four years with a one-year cliff, then monthly or quarterly vesting, is the common market standard.
What is a bad leaver?
A founder who leaves in circumstances defined as "bad" in the agreement, such as termination for cause. The agreement usually lets the other shareholders buy their shares at a low price.
Does a vesting agreement need a notary in Germany?
Generally yes, because it contains an obligation to transfer GmbH shares, which requires notarial form.
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Join the waitlist →Sources and further reading. §15 GmbHG; Y Combinator, Splitting equity among founders.
Educational material, not legal, tax or investment advice. Rules and figures change; confirm with qualified counsel or a tax adviser in your jurisdiction before acting. Last updated October 6, 2026.