A vesting 'cliff' is a minimum time you must remain employed before any of your grant vests. The standard at most US startups is 4 years total with a 1-year cliff: on day 365, you suddenly own 25% of your grant; before that, you own zero of it.
Why companies use a cliff
The cliff exists to protect the company from giving real equity to short-tenure hires. Bad fit detected at month 4? You leave with nothing. The cliff also protects the company from departure-induced cap-table mess: you don't end up with 100 tiny ex-employee shareholders from your first hiring cohort.
Why employees should know it
If you're considering leaving in months 9–11, the cost is enormous. Each week before the cliff is a week of pure equity loss. Many engineers time their departures to land just after the anniversary.
Sometimes a 1-year cliff is back-dated — your grant says vesting started on your hire date, but the documentation isn't filed until weeks later. Confirm the start date in your grant agreement, not the date on your employment letter.
Variations
- 4-year / 1-year cliff: still by far the most common.
- 3-year / 1-year cliff: increasingly common, used by Meta and some unicorns to make annualised comp look better.
- 2-year / 6-month cliff: rare; usually senior hires or contracts.
- Single-trigger acceleration: equity vests on acquisition. Negotiable.
- Double-trigger acceleration: equity vests on acquisition + involuntary termination. More common, easier to negotiate.