Vesting

Definition

The process by which employees gradually earn their stock options over time, designed to keep people from taking the equity and running. It's a four-year golden handcuff that makes quitting feel like leaving money on the table, even when the money is imaginary.

Example Usage

"My vesting schedule says I own 25% of my options after year one and 100% after year four, assuming the company still exists in four years, which statistically it won't."

Related Terms

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claw-back

A provision allowing limited partners to reclaim previously distributed carried interest from GPs if later losses reduce overall fund returns. The nightmare scenario keeping fund managers up at night.

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Intermediate

ownership target

The percentage of a company a VC aims to own to make an investment worthwhile relative to their fund size. It's why large funds often can't invest in your seed round—they need bigger slices.

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optionality

Keeping multiple strategic paths open while committing to none, often praised as strategic flexibility or criticized as inability to make decisions. The business equivalent of dating multiple people because you're 'keeping your options open.'

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board observer

Someone who attends board meetings but lacks voting rights, typically a junior investor or potential future investor. They're flies on the wall with NDAs and calendars full of meetings they can't influence.

🚀 Startup / VC

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Acqui-Hire

When a company buys another company not for its product but for its employees, which is the corporate equivalent of buying a house just for the kitchen. The product gets quietly killed while the team gets quietly absorbed and quietly regrets everything.

🚀 Startup / VC

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TAM

Total Addressable Market -- the theoretical maximum revenue if you sold your product to every possible customer on Earth, including people who don't want it, can't afford it, and live in places without internet. It's the biggest number in every pitch deck and the most fictional.

🚀 Startup / VC

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