Vesting means shares or options are earned over time instead of owned all at once. A cliff is the first waiting period: if someone leaves before it ends, they earn nothing. The common schedule is four years with a one-year cliff.
Example
A co-founder holds 3,000,000 shares on a four-year schedule with a one-year cliff. After 12 months, 750,000 shares vest at once. The rest vest monthly, about 62,500 a month, until month 48.
Why it matters for early-stage founders
Investors expect founder shares to vest. It protects the company and the remaining team if a co-founder leaves early, and it is one of the first things checked in due diligence.
The common mistake
Skipping founder vesting because "we trust each other". Without it, a co-founder who leaves after three months can keep a large share of the company.
Track vesting in your cap table
Use the free cap table template to record founders, vesting and your option pool in one place.
Get the cap table template