Vesting Schedule

A vesting schedule is the timeline that determines when you actually own the equity you've been granted. Even if your offer letter says "50,000 stock options," you don't get them all on day one. Instead, they vest — become yours — incrementally over time. This structure ensures that equity goes to people who stick around and contribute.

The most common vesting schedule in startups is "4-year vest with a 1-year cliff." This means your equity vests over four years total, but nothing vests in the first year. On your one-year anniversary (the cliff), 25% of your total grant vests at once. After that, the remaining 75% vests monthly or quarterly over the next three years. If you leave before the one-year cliff, you walk away with zero equity.

Some companies use different structures: 3-year vests, back-weighted schedules (more vests in later years), or milestone-based vesting (tied to performance targets rather than time). Founders' shares also typically have vesting — if two co-founders split the company 50/50 on day one and one leaves after three months, the remaining founder doesn't want the departing co-founder to keep 50% of the company. Investor-required founder vesting (usually with credit for time already served) protects against this scenario.

Vesting schedules align incentives between the company and its team. They protect startups from granting equity to someone who leaves after a few months. For employees, understanding your vesting schedule tells you exactly when your equity becomes real — and helps you make informed decisions about job changes. If you're three months from a big vesting event, that's worth factoring into any career move. As a founder, structuring vesting well helps you retain talent and shows investors you're thinking about long-term alignment.