Raising money
Vesting and cliff
Vesting is a schedule that lets a founder or employee earn their shares over time, and the cliff is the first stretch of it, when nothing is earned yet, so someone who leaves early keeps only the part that has already vested.
Also called vesting schedule, cliff
Looking this up for a class, a job, or something you want to build? If it is the last one, nommi reads your idea before you spend months on it.
Leave before the cliff ends and you leave with nothing from that grant. When the cliff ends, the shares for that whole stretch vest at once. A common convention is four-year vesting with a one-year cliff. Investors often ask founders to put their own shares on vesting before a round.
This is not legal or tax advice, check with a lawyer or accountant.
At a glance
| Vesting | Cliff | |
|---|---|---|
| What it is | The schedule for earning shares over time | The first stretch of that schedule |
| Leave during it | You keep the part already vested | You leave with nothing from that grant |
| When it ends | Every share in the grant is earned | The shares for that whole stretch vest at once |
When this shows up
Example, not a real founder: you split shares evenly with a cofounder and skip vesting because you trust each other. They leave a few months later to take a job. They still own half the company, and new investors see that as a problem.
What to do next
Write down each founder's shares and whether they vest. If they do not, ask a lawyer to set up a vesting agreement before your next investor conversation.