Cliff

TL;DR

A vesting feature where no equity vests until a specified milestone (typically 1 year of service), then a chunk vests at once.

A vesting cliff defers the start of vesting. With a standard 4-year vesting schedule and a 1-year cliff, no equity vests for the first 12 months. On the 12-month anniversary, 25% vests instantaneously, and the remaining 75% vests monthly over the next 36 months.

Cliffs protect against equity wasted on bad early hires. The 1-year cliff is the universal default for employee stock options; founders sometimes have cliffs structured differently in the founder vesting schedule.

Worked example

A new hire's 4-year grant has a 1-year cliff. They leave after 11 months with 0 vested. Had they stayed 12 months and 1 day, 25% (12 of 48 months) would have vested.

Common pitfalls

• Letting an early hire stay just past the cliff with no value created.
• Skipping cliffs on advisor grants and creating dead equity on the cap table.
• Negotiating away the cliff as a hiring sweetener.

When this shows up in a pitch deck

Diligence content; rarely on the deck.

Related terms

• Vesting — The schedule by which equity grants are earned over time, typically 4 years with a 1-year cliff for founders, employees, and advisors.
• Founder Vesting — A vesting schedule applied to founder equity, typically required by VC investors to align founders with the long-term outcome.
• ESOP — Employee Stock Option Plan — the legal structure that lets a company grant options to employees at a defined strike price, governed by board approval and 409A.
• Advisor Shares — Equity granted to formal advisors, typically 0.1–1% of the company per advisor, vesting over 1–4 years for ongoing involvement.
• Acceleration (Single Trigger) — A vesting acceleration provision where unvested equity vests automatically on a single triggering event — typically a change of control.

Use this in your next pitch deck

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