The short answer
A cliff is the period at the start of a vesting schedule during which no equity vests. When the cliff ends, a lump of equity vests at once, and the rest vests in regular installments. A one-year cliff on a four-year schedule is a common structure.
- Nothing vests before the cliff date.
- At the cliff, the accrued portion vests in one step.
- Cliffs protect the company from very short tenures.
- Founders often get vesting credit instead of a fresh cliff.
How it works
A cliff is part of a vesting schedule. If someone leaves before the cliff, they leave with no vested equity. On the cliff date, the equity that would have vested month by month vests together. After that, vesting usually continues monthly.
Worked example (hypothetical)
An early engineer receives 48,000 options vesting monthly over four years with a one-year cliff. If they leave at month 11, they vest nothing and the options return to the option pool. At month 12, 12,000 options vest at once. From then on, 1,000 vest each month.
Why it matters to a pre-seed or seed founder
Cliffs keep equity aligned with commitment. For employees, they let you correct a bad hire without giving away equity. For founders, a fresh one-year cliff at your first round can feel unfair if you've already worked a year; it's common to ask for vesting credit for time served so the cliff is already behind you. Agree on the approach before an investor raises it, and record it on your cap table.
Frequently asked questions
Is a one-year cliff required?
No. It's common but negotiable. Some companies use shorter cliffs or none for certain roles.
Do advisors have cliffs?
Often a short one, or none. Advisor agreements set their own terms.
What if the company is acquired before the cliff?
It depends on any acceleration terms in the grant. Without acceleration, unvested equity follows the deal terms.