Market defaults for four year vesting
Four year vesting became the norm because it roughly matches the time it takes a startup to grow from an early stage to a point where equity has meaningfully re-rated in value, while still being short enough to motivate employees within a realistic career horizon. After the 12 month cliff, the remaining 75% typically vests in equal monthly instalments of 1/48th of the total grant, the same structure described in the general vesting schedule page. Companies that want to speed up vesting on an exit or termination layer accelerated vesting terms on top of this base schedule.
| Month | Cumulative vested % | Notes |
|---|---|---|
| 12 | 25.0% | Cliff triggers |
| 18 | 37.5% | Six months of monthly vesting |
| 24 | 50.0% | Halfway point |
| 36 | 75.0% | Three years complete |
| 48 | 100.0% | Fully vested |
Market consistency and investor due diligence
- Investors expect it and it signals a well governed cap table during due diligence.
- It is long enough to discourage short term job hopping purely for equity.
- It is a known quantity for candidates comparing offers across companies.
- It is simple to model and explain compared with bespoke schedules.
When schedules differ from four years
Later stage companies sometimes use three year schedules for new hires, since joining a company close to an exit makes a four year horizon less relevant. Some founder vesting deals extend beyond four years, or restart at a new funding round, reflecting the longer time the company expects to need founders in place, a variation worth checking against standard vesting cliff terms.
Common questions on the four year default
- Is four years fixed by law?
- No. It is market convention, not a legal requirement, and can be set differently in the plan rules or grant agreement.
- Does the schedule reset if a grant is later increased?
- The original grant keeps its schedule; a top-up or refresher grant typically starts its own new four year schedule.
- What is 1/48th vesting?
- It refers to monthly vesting over 48 months, where each month after the cliff releases one forty-eighth of the total grant.
General information for founders, not legal or tax advice. Thresholds and rates change, so confirm the current position with an adviser in the relevant country before granting.