Equity & options
Also called cliff vesting, one-year cliff
A vesting cliff is an initial period during which no equity vests at all, after which a large block vests at once and the remainder vests gradually, most commonly one year into a four-year schedule.
The market standard is four years with a one-year cliff. Nothing vests for twelve months. On the first anniversary, 25% vests in a single step. The remaining 75% then vests monthly or quarterly over the following three years.
The cliff exists to protect the company and the remaining shareholders from someone leaving after a few months with a meaningful equity stake. Anyone who departs before the anniversary leaves with nothing.
Founders usually vest too, and investors will normally require it at the first priced round even for equity a founder has held since incorporation. Credit for time already served is common and negotiable.
Where founder vesting is reset at a financing, the fair position is that months already worked count toward the schedule rather than restarting the clock entirely.
You keep nothing from that grant. The entire award is forfeited and returns to the option pool.
Yes, for employees on a four-year schedule. Advisers often have no cliff at all, since their grants are small and their engagement is measured in hours.
A board can accelerate or waive vesting, and this occasionally happens in an acquisition or a negotiated departure. It is discretionary, not a right.
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