A lesson on equity and vesting: be fair and clear while you still have nothing

On December 2, 2025, after a strategy coaching session with Hai H Nguyen (Forbes Under 30 Asia Class of 2017, founder of BeginGuru, a fundraising coach), we talked at length about capital structure and people. As he explained how share vesting works, memories of my earliest days as a founder came back. His concise, practical advice touched an old scar of mine.

I am grateful to him for these valuable lessons in governance. Because of that conversation, I understand much better the story I want to tell here, and why I regard it as a lesson worth its price.

It starts with emotion

Startups often begin over cups of coffee, full of excitement. People come together on enthusiasm and near-total trust. Equity is usually split quickly, on feeling: "You take this area, I'll take that one, and we'll share it as brothers."

I started that way too. I invited an older colleague to build the company with me. Because I respected his talent and contribution, I gave him a fairly large share of equity from the very first day. My thinking was simple: if we were committed to going the long way together, and we respected each other, why calculate so much?

The lesson arrives in the hardest moment

But business always brings turns nobody foresees. At one point our direction changed, and he was no longer continuing with the company. That is when the real problem appeared.

The shares I had handed over on day one legally belonged to him. Yet for the sake of fairness and the company's long-term development, I needed to take them back so that resources could stay with the people who remained. At that time the company was in a very difficult financial period. To buy those shares back, I had to borrow money from many places.

Looking back, I still feel fortunate. I was fortunate to deal with a decent, honorable person; the two of us sat down and settled it amicably. But it also unsettles me to think: had it not been him, but a more complicated situation, I might not have been able to keep the company I had built.

My conclusion is that nobody was at fault. It was the result of a mechanism that was unclear from the start. While things go well, a missing mechanism causes no trouble. It shows only when someone has to leave, which is exactly when the company is least able to absorb more pressure.

Vesting: clarity protects both sides

After that episode, and especially after today's discussion, I understand two concepts more deeply: share vesting (allocating equity along a schedule) and non-compete commitments.

I have come to see that clarity from the beginning is not calculation. It is protection for both sides.

Instead of handing over all the equity at once, we apply vesting: shares are recognized gradually, in line with time and real results contributed. The longer someone stays, the greater their stake. Whatever has not yet been recognized is handled under conditions agreed in advance.

This works for both parties:

• For the founder: the company does not have to bear a large cost at the hardest possible time.
• For the partner: their stake reflects what they have genuinely contributed, clearly and fairly.
• For both: if someone has to stop midway, the parting is smooth, and nobody is left at a loss or with lingering resentment.

Non-competition

Another lesson is about commitment. When a co-founder who holds business secrets leaves, what ensures that information is not used to set up a similar company? That is where a non-competition agreement comes in. To be clear, this is a governance question, not suspicion of anyone. The older colleague who went through that period with me is entirely decent.

In the past I worked on trust. Now I understand that trust lasts only when it is written down on paper. A document does not reduce trust; it keeps trust from depending on circumstances or on anyone's mood at a given moment.

Closing

Starting a company is an emotional journey, but running one calls for a cool head. Do not let early politeness make you pay later, in cash, even in borrowed money, and in prolonged exhaustion.

I share this story not to lecture anyone, but to offer a practical perspective to those who are planning to start a company. Build a fair and transparent mechanism from the very beginning, while you still have nothing. Only when rights are clear can we keep the relationship whole and go further together.

The more affection and respect there is between you, the more the equity should be vested. That is not pettiness; it is the professionalism that protects what you have built.

It was an expensive lesson, but I was lucky enough to come through it.