What is a Cliff?
Cliff
A Cliff is a specific period at the beginning of a vesting schedule during which no equity is earned.
Why It Matters for Startups
Governs the legal rights and ownership distribution of the entity; configuring Cliff is critical for managing long-term cap table health and alignment during equity incentive plan structures.
Detailed Deep Dive
A Cliff is a specific period at the beginning of a vesting schedule during which no equity is earned. The standard vesting schedule includes a "one-year cliff," meaning that an employee or founder must remain with the company for at least 12 months before earning any equity. If they leave before the cliff, they walk away with zero shares. After the cliff, equity vests monthly or quarterly.
Frequently Asked Questions
Q:What is a one-year cliff?
It requires an employee to remain at the startup for a full 12 months before any of their allocated equity begins to vest.
Q:What happens if someone leaves before the cliff?
They forfeit 100% of their stock options or shares, leaving the company with zero equity.
Quick Facts
- CategoryLegal
- Key ApplicationEquity incentive plan structures
Coverage Trend12 Weeks
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Cliff Media Coverage & Intelligence
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