Cliff

An initial period during which no equity vests at all. Leave before it and you get nothing.

Example

A one-year cliff on a four-year vest.

Important

The cliff is what protects the company from a short, unproductive stint. It protects the leaver too — it makes 'this is not working' a survivable conversation.

Related terms

• Vesting — Earning your shares over time rather than owning them all immediately.
• Equity — Ownership in the company, usually held as shares.
• Dead equity — A meaningful stake held by someone no longer contributing to the company.

Lessons that explain it

• Vesting and cliffs — Why founders should vest too, and why the one-year cliff protects everyone — including the person who leaves. (12 min)
• Compensation and employee equity — Salary, equity, and how to explain a grant honestly to someone who has never held one. (15 min)

All 176 terms in the Founder glossary