Reverse vesting

Reverse vesting is a mechanism by which shares already held by founders at company formation are subject to a progressive buy-back right by the company if the founder departs before the end of the vesting period. Unlike standard vesting (rights are acquired progressively), reverse vesting starts from full ownership and the freedom from repurchase accrues over time. It is typically required by investors at the time of a first institutional fundraising to protect the project against premature co-founder departure — ensuring key contributors remain committed throughout the critical early growth phase.

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Example: at Series A, investors require 4-year reverse vesting with a 1-year cliff on the founders' 500,000 shares. If a co-founder leaves after 8 months, the company can repurchase 100% of their shares at nominal value (CHF 0.10). If they leave after 24 months, they retain 50% permanently and the company can repurchase the remaining 50% — protecting investors and the remaining co-founder from a departing shareholder retaining unearned equity.

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Hectelion structures reverse vesting mechanisms in shareholders' agreements for fundraising transactions, balancing investor protection with fair founder treatment.