Cliff (Vesting)

The cliff is the initial waiting period in a vesting schedule where zero equity vests. It's a probationary period of sorts — the company wants to make sure you're going to work out before any equity becomes yours. The standard cliff for startup employees is one year.

When you hit the cliff date (your one-year anniversary), a chunk of equity vests all at once — typically 25% of your total grant. After that, the remaining equity vests smoothly, usually monthly or quarterly, over the remaining three years. The cliff creates a binary outcome for that first year: either you make it to 12 months and get 25% of your equity, or you leave before that and get nothing.

Cliffs exist to protect both the company and existing shareholders. Without a cliff, an employee who quits after two months would walk away with 4% of their equity grant (2/48 months). That doesn't seem like much, but across many hires, it fragments the cap table and dilutes everyone. The cliff ensures that only people who make a meaningful contribution earn equity. Some companies set shorter cliffs (6 months) for senior hires or eliminate them entirely for executives, but the 1-year cliff remains the default in the startup world.

If you're joining a startup, the cliff means your first year is effectively an all-or-nothing bet on your equity. If you're fired or quit at month 11, you get zero equity from that grant. For founders building a team, the cliff protects you from giving away equity to early hires who don't work out. It's one of the few truly binary decisions in startup compensation — being aware of your cliff date can influence decisions about timing, job satisfaction, and career moves.