Vesting (and the cliff)

How it works

Standard 4/1 vesting: 0% vests until the 1-year anniversary (the 'cliff'), then 25% vests at once and 1/48th of the grant each month for the remaining 36 months. Founders typically also vest on the same schedule — investors require this to lock founders in. Some startups offer 6-year vesting (Stripe famously does this), and acceleration provisions speed up vesting on a change of control.

Related terms

• Option pool (ESOP)
  An option pool is a reserved allocation of equity (typically 10–20% of the company) set aside to grant to current and future employees as stock options.
• Acceleration
  Acceleration provisions speed up vesting on a change of control — single-trigger accelerates on the acquisition itself, double-trigger requires both an acquisition AND termination.
• Term sheet
  A term sheet is a non-binding document outlining the key terms of a proposed investment — valuation, amount, board seats, liquidation preference, anti-dilution, and other rights.