Vesting is the process by which a holder earns rights to equity over time, contingent on continued service to the corporation. Until vested, the equity is conditional and is forfeited (for options) or repurchased at cost (for restricted stock) if the holder leaves.

A cliff is the minimum service period that must be completed before any vesting occurs. The standard one-year cliff means that if the holder leaves before their first anniversary, no shares vest at all. After the cliff, vesting begins (typically with a back-loaded jump that recognizes the full first year of service).

What is reverse vesting?

Reverse vesting applies to founder shares that are issued in full at incorporation but subject to a repurchase right held by the corporation. The repurchase right lapses over a vesting schedule, so the founder effectively earns their shares back. The economic and tax treatment is often more favorable than a forward-vesting option grant, especially in the US (via 83(b) election).

Cap table & equity

Vesting & cliff

Vesting: gradual earning of equity over time. Cliff: minimum service before any vesting.

Definition

Vesting is the gradual earning of equity over time, contingent on continued service. A cliff is a minimum service period before any vesting begins. The market standard is 4-year vesting with a 1-year cliff: 25% vests at month 12, then monthly through month 48.

Common patterns

Founder vesting	4-year vest, 1-year cliff, with reverse-vesting structure
Employee options	4-year vest, 1-year cliff, monthly thereafter
Advisor grants	1–2 year vest, often no cliff or 3-month cliff
Acceleration	Single-trigger or double-trigger on change of control

The standard schedule

The market standard for vesting in private corporations is four years with a one-year cliff:

Months 0–12: nothing vests. If the holder leaves, all unvested equity is forfeited or repurchased.
Month 12: 25% of the grant vests in a single tranche (the cliff).
Months 13–48: the remaining 75% vests monthly (typically 1/48 per month, sometimes 1/36 over the remaining 36 months).
Month 48: vesting is complete; the holder fully owns the equity.

Variations include 3-year vests (used by some funds), 5-year vests (rare, used by some growth-stage corporations), and back-loaded vests (more vesting in later years to encourage retention).

Why the cliff exists

The cliff filters out misalignment early. If a hire turns out to be the wrong fit and leaves within the first year, the corporation has lost some salary but no equity. Without a cliff, every termination in the first six months would create a partial-vest cap table entry that has to be cleaned up.

For founders, the cliff also addresses a different risk: a co-founder departure in the first year typically leaves the corporation needing to reallocate the departed founder's equity. The cliff makes this clean.

Acceleration

Most option and restricted-stock agreements include acceleration provisions for a change of control:

Single-trigger: all unvested equity vests on the change of control itself, regardless of what happens to the holder afterward.
Double-trigger: unvested equity vests only if the change of control is followed by an involuntary termination of the holder within a defined window (typically 12 months).

Double-trigger is the modern standard. Single-trigger is increasingly disfavored because it can complicate M&A transactions: acquirers want vesting to continue after the deal to retain key employees.

In Octelligence

Vesting schedules, cliffs, and accelerations, tracked per grant.

Octelligence captures vesting schedules per option and restricted-stock grant, including cliffs, monthly cadence, and acceleration triggers. The cap table reflects vested versus unvested shares in real time, and the activity log shows every vesting event.

See stock options & vesting

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Vesting that runs itself

Track vesting, cliffs, and acceleration in one place.

Schedules per grant, vested vs. unvested in real time, acceleration on the right triggers.

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Vesting & cliff

The standard schedule

Why the cliff exists

Acceleration

Related terms