Cliff

A cliff is the minimum tenure required before any shares or options begin to vest. The standard cliff is one year: if an employee or founder leaves before their one-year anniversary, they receive zero equity. On the cliff date, a lump sum (typically 25% of the total grant) vests at once, and the remainder vests on a regular schedule.

The cliff serves as a trial period for equity purposes. Hiring mistakes happen, co-founder relationships fracture, and early employees sometimes realize the startup life is not for them. The cliff ensures that people who leave early do not retain a meaningful equity stake. Without it, even a one-month employee would accumulate equity.

Some companies modify the standard cliff for specific situations. Senior executives or proven leaders might negotiate a shorter cliff (6 months) or no cliff at all. Founders who have already been working on the company for years might negotiate a cliff waiver or accelerated vesting. In acqui-hire scenarios, acquiring companies often require new vesting schedules with fresh cliffs for the acquired team.