October 26, 2026
A restricted stock purchase agreement (RSPA) is the contract each founder signs to buy their shares from a new company. The founder pays a small amount, usually par value, and assigns their startup-related IP to the company. In return, they get shares that vest over time, and the company can buy back unvested shares if the founder leaves. Each founder signs their own RSPA when the company issues their stock and files an 83(b) election within 30 days of the date the shares are issued.
Key takeaways
Founders buy their shares at fair market value, which at formation is par value, typically $0.00001 a share. For 4,000,000 shares, that's $40. It feels trivial, but make the payment by bank transfer or check and keep the record. Unpaid founder stock is a common problem in due diligence.
Founders also assign to the company any IP they created for the business: code, designs, wireframes, domains, brand and business plans. The company, not the individual founder, has to own it. See Who Owns What?
It's common for a founder to leave within the first year or two. Vesting means founders earn their shares over time, so a founder who leaves early doesn't walk away with a large stake.
The most common schedule is four years with a one-year cliff. Say James, a founder of Gregarious Games, Inc., buys 4 million shares on that schedule. Nothing vests during the first year. On the one-year anniversary, 1 million shares (one quarter) vest at once. The remaining 3 million vest monthly over the next three years, about 83,333 shares a month.
Vesting is technically a right of the company to buy back unvested shares, called the repurchase option, which lapses as the founder keeps working. Typical language:
"1/4th of the Vesting Shares shall be released from the Repurchase Option on the 12-month anniversary of the Vesting Commencement Date, and an additional 1/48th of the Vesting Shares shall be released from the Repurchase Option on the corresponding day of each month thereafter (and if there is no corresponding day, the last day of the month), until all Vesting Shares are released from the Repurchase Option."
The vesting start date can be set to when the founder began working full time, even before the company was incorporated, so founders get credit for work already done. See Vesting Schedules.
The company can buy back the unvested shares at the price the founder paid, typically $0.00001 per share, usually within a set window, often 90 days. The founder keeps the vested shares, subject to the company's right of first refusal. Leaving before the one-year cliff means leaving with nothing. See Unvested Shares.
Many founders negotiate "double-trigger" acceleration: some or all of their unvested shares vest if the company is sold and they're terminated or their role is cut. "Single-trigger" acceleration, where shares vest on a sale alone, is harder to get, because buyers and investors want founders to stay after the deal. See Single vs Double Trigger Acceleration.
Before a founder sells shares to an outside buyer, the company can buy them on the same terms. That keeps unknown stockholders off the cap table. Until the company raises a priced round, the company is usually the only holder of this right. After a priced round, investors typically get their own right of first refusal in a separate agreement. See Right of First Refusal.
A few short provisions only matter when something goes wrong: a divorce, a death, an estate planning transfer, or a founder who won't sign paperwork on the way out. They are much easier to sign at formation than to add later.
Spousal consent. In the nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), property a married couple acquires during the marriage generally belongs to both spouses, so a founder's spouse may have an interest in shares the founder buys while married. What counts is where the couple lives, not where the company is incorporated, and a few other states let couples opt into community property. In a spousal consent, the spouse agrees to be bound by the RSPA's vesting, repurchase and transfer terms and often authorizes the founder to act for both of them on the shares. It doesn't erase the spouse's interest, but it is meant to subject that interest to the same restrictions. Many companies ask every married founder for one, wherever they live. If your spouse is also investing, see What Do I Tell My Friends and Family?
Stock power and escrow. Founders usually sign a stock power, a one-paragraph transfer form signed in blank, along with the RSPA. The company's secretary or another escrow agent holds it, with any stock certificates. If a founder leaves and the company exercises its repurchase option, it pays the repurchase price, completes the stock power and records the transfer without the departing founder's signature, which matters most when the departure isn't friendly.
Estate planning transfers. Most founder RSPAs let a founder give shares to family members or to a trust for estate planning, though some allow it only for vested shares. The family member or trust signs on to the same terms, so any unvested shares keep vesting on the founder's service and stay subject to the repurchase option and the right of first refusal. These transfers can have tax and estate consequences, so plan them with your estate planning attorney and tax advisor.
Death or divorce. If a founder dies, the shares pass to the estate or heirs, who take them subject to the RSPA. Many RSPAs treat death as the end of service, so the company can buy back unvested shares, though some accelerate vesting instead. If a court awards shares to a spouse in a divorce, the spouse generally takes them subject to vesting, the repurchase option and the right of first refusal. Some RSPAs go further and give the founder or the company a right to buy back shares that pass to a former spouse or an estate, usually at fair market value or a price set by formula. Check which version you signed.
Without an 83(b) election, the IRS treats each portion of vesting stock as income when it vests, at whatever it's worth then, which can mean a large tax bill on shares you can't sell. The election tells the IRS to treat all the stock as received on the purchase date instead. When founders pay fair market value, there's nothing to report then, and later growth isn't taxed until they sell.
File within 30 days of the date the shares are issued (not the vesting start date), using IRS Form 15620 or a letter with the same information, either online through the IRS website or by certified mail. There are no extensions. Ask your tax advisor how it applies to you. See 83(b) Election.
Generally yes. They're standard forms. The mistakes we see are in how they're filled in: wrong vesting start dates, the price never paid, or the 83(b) never filed. Have a lawyer check them before your first priced round.
Related: 83(b) Election · Vesting Schedules · I Just Incorporated. Now What? · Delaware C Corp Incorporation Package
