What Is a Cliff?
A cliff is an initial waiting period in a vesting schedule during which no equity vests, after which a lump of it vests all at once.
How it works
A cliff sits at the start of a vesting schedule. If you leave before the cliff date, you typically receive none of the equity. When you reach it, the portion that would have vested during that period vests at once, and the rest then vests gradually, often monthly.
The most familiar structure is a four-year schedule with a one-year cliff. The length and the lump amount are set by agreement, so confirm yours in writing.
Example
For example, an employee has options on 48,000 shares vesting over four years with a one-year cliff. After 11 months, nothing has vested. At month 12, 12,000 shares vest at once, which is one quarter. From then on, 1,000 shares vest each month until all 48,000 are vested at month 48.
Why founders care
The cliff is a trial period. It protects the company if a new hire or co-founder is a poor fit and leaves quickly, since they do not walk away with equity after a few weeks. For the person receiving equity, it is a reason to understand the date and plan around it. A departure a day before the cliff can mean no equity at all.
Common mistakes
- Not tracking the cliff date or the grant start date.
- Setting a cliff on co-founder shares without discussing it.
- Assuming a cliff always means one year; it is a negotiated term.
Frequently asked questions
What is a one-year cliff?
It is a vesting rule that nothing vests until you complete one year of service. At the one-year mark, a first chunk vests, commonly a quarter of a four-year grant, then the rest vests over time.
Is a cliff required?
No. It is a common term, not a legal requirement. Some companies skip it or use a shorter one. Ask your lawyer what suits your team.
Related terms
Go deeper
- How to Split Equity Between Co-Founders (and Vesting) GuideHow to split equity between co-founders: factors to weigh, equal vs unequal splits, 4-year vesting with a 1-year cliff, and a worked example with round numbers.
- How to Find a Co-Founder and Know If They Fit GuideHow to find a co-founder: do you need one, where to look, how to test the fit, solo founder vs co-founder, and the red flags that should make you walk away.
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General information, not legal, tax or financial advice. Reviewed 11 November 2026.