Meaning
A specific contractual condition specifies the moment a founder must transition from part-time involvement to exclusive, full-time employment at a venture. This commitment trigger prevents a scenario where early participants retain substantial equity while dedicating their primary professional efforts elsewhere. It holds the founder to a binding schedule of dedication, protecting the cap table from early-stage fragmentation.
Operational Milestone
Transition points are often tied to securing a predetermined amount of external capital or achieving a minimum viable product. When these events occur, the commitment trigger requires the participant to resign from other roles or face equity forfeiture. This mechanism ensures that the company receives the necessary talent concentration when funding allows.
Legal Consequence
Non-compliance with the clause results in automatic reallocation of unvested shares back to the corporate treasury. The commitment trigger operates without requiring manual board intervention once the predetermined threshold is crossed. It establishes a clear, objective boundary that limits ambiguity during early team transitions.
Equity Protection
Early-stage ventures depend heavily on the continuous execution of the original vision. The commitment trigger mitigates the risk of dead equity by aligning ownership with active contribution. Investors view the presence of such clauses as a measure of structural stability.
