Finance & Funding

Vesting

The process by which an employee earns the right to their equity or stock options over time, typically over 4 years with a 1-year cliff.

What is Vesting?

Vesting is a schedule that determines when employees (or founders) earn full ownership of their equity. It incentivizes long-term commitment.

Standard Vesting Schedule

The most common structure is 4-year vesting with a 1-year cliff:

  • Cliff: No shares vest until 12 months of service
  • After Cliff: 25% vests immediately
  • Monthly Vesting: Remaining 75% vests monthly over 3 years

Types of Vesting

  • Time-based: Vests over a set period
  • Milestone-based: Vests upon achieving goals
  • Hybrid: Combination of time and milestones

Key Terms

  • Cliff: Initial period before any vesting
  • Acceleration: Faster vesting (single/double trigger)
  • Reverse Vesting: For founders with existing shares

Related Terms

Cap Table (Capitalization Table)

Relevant AI Agents

Use these CoFounder.im AI agents to apply this concept to your startup:

Funding Advisor
Team Architect
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