Two-Tier Share Vesting Agreements for Technical Assets and Forward Development Commitments
A two-tier vesting agreement separates equity granted for transferred technical assets from equity granted for forward engineering commitments.
forward development commitments
Meaning
Agreements to perform specific technical or product work following a sale ensure the continued evolution of the asset. These forward development commitments are common when a larger firm acquires a startup to integrate its technology into a broader platform. The founders agree to complete a roadmap that was already in progress or to build new features requested by the buyer.
This ensures the asset does not become obsolete immediately after the transfer of ownership.
Promised Tasks
Items on the list of work are defined by technical requirements and a deadline. Promised tasks under forward development commitments represent a specific output that the founding team must produce. Failure to meet these deadlines can result in the loss of holdback payments or other financial penalties.
Resource Allocation
The founding team must dedicate a portion of their time and staff to fulfilling these promises. Resource allocation becomes a challenge when the new parent company also demands attention for integration tasks or new projects. The team must balance the maintenance of the old roadmap with the requirements of their new roles.
A Roadmap
The document outlining the planned path for the product serves as the basis for the agreement. A technical roadmap provides the boundary for what is included in the forward development commitments and what is considered out of scope. It protects the developers from an endless cycle of new requests that were not part of the original deal.