Vesting
Vesting for Founders and Employees
Vesting sets the rules for when someone actually earns the equity they have been granted. It protects the company if someone leaves early and gives holders a clear timeline for when shares or options become theirs.
Vesting schedules, cliffs and leaver rules
Vesting Schedule
A vesting schedule sets out when equity is earned over time, typically over four years with a one year cliff, so that holders only keep unvested equity if they stay long enough.
Vesting Cliff
A vesting cliff is a minimum period, usually 12 months, before any equity vests at all. Leaving before the cliff means forfeiting the entire grant.
4 Year Vesting
Four years with a one year cliff is the most widely used vesting period in startups because it balances retention with a realistic time horizon for equity to become meaningful.
Accelerated Vesting
Accelerated vesting speeds up when equity vests, usually on an exit or termination without cause. Single trigger accelerates on the event alone; double trigger requires two events together.
Reverse Vesting
Reverse vesting is an agreement where founders subject shares they already own to vesting and buyback rights, so leaving early means giving back the unvested portion.
Milestone Vesting
Milestone vesting releases equity when specific performance targets are met, such as revenue goals or product launches, instead of purely on the passage of time.
Good Leaver / Bad Leaver
Good leaver and bad leaver provisions decide how much equity a departing founder or employee keeps, based on the circumstances of their departure.
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