Cliff
The minimum period before any equity vests — typically 12 months.
Definition
A cliff is the initial period in a vesting schedule during which no equity vests. If an employee or founder leaves before the cliff date, they receive no equity. The standard cliff period is 12 months. After the cliff, vested equity is awarded (usually as a lump sum for the cliff period), and subsequent vesting continues monthly or quarterly.
Why It Matters
The cliff protects the company from issuing equity to someone who leaves shortly after joining. For co-founders, the cliff ensures all founders are committed before they have vested meaningful ownership. It is a critical term to include in any co-founder or employment agreement from day one.
Example
An employee with a 4-year vest and 1-year cliff who leaves at month 10 receives zero equity. The same employee leaving at month 13 has vested 25% + 1 month of post-cliff vesting.