A founder clawback is the contractual provision allowing the company to reclaim a founder's vested equity under defined trigger events. Trigger events typically include termination for cause, breach of restrictive covenants, fraud, or material misconduct, with reclamation structured as a forced repurchase at a defined price (often original purchase price), representing an aggressive expansion of standard vesting and repurchase rights. It is the most punitive of the founder-control mechanisms and a provision that signals an unusually aggressive negotiating posture by investors.
The standard structure of a founder clawback: