NAVIGATION

What is a Vesting Cliff?

Definition

Vesting Cliff

A Vesting Cliff is a specific milestone at the beginning of a vesting schedule during which no equity is earned until the duration is completed.

Why It Matters for Startups

Governs the legal rights and ownership distribution of the entity; configuring Vesting Cliff is critical for managing long-term cap table health and alignment during employment agreement drafting and retention planning.

Detailed Deep Dive

A Vesting Cliff prevents equity distribution to short-term contributors. Under standard one-year cliff schedules, employees must complete 12 months of service before earning their first equity slice.

Frequently Asked Questions

Q:What is the industry standard vesting cliff?

A one-year cliff is the industry standard for both founders and early employees.

Q:What happens if an employee leaves before the cliff?

They leave the company with zero vested shares or options, protecting the startup from short-term departures.

Quick Facts

CategoryLegal
Key ApplicationEmployment agreement drafting and retention planning

Coverage Trend12 Weeks

12w agoToday

Related Startup Terms

Vesting Cliff ESOP

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[Vesting Cliff | SPIDITS Glossary](https://spidits.com/startup-glossary/vesting-cliff)

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