---
title: "What Is Cliff Vesting?"
term: "Cliff Vesting"
description: "Cliff vesting is a vesting schedule where no equity vests until a set period passes, then a block vests at once before regular incremental vesting continues."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["equity", "deal-terms"]
source: https://venturecapitaltracker.com/glossary/cliff-vesting
---

# What Is Cliff Vesting?

> Cliff vesting is a vesting schedule where no equity vests until a set period passes, then a block vests at once before regular incremental vesting continues.

**Cliff vesting** means equity does not vest at all until a specified waiting period elapses; at the cliff date, a predetermined portion vests in a lump sum.

## How it works

A typical new hire grant might vest 25% after one year (the cliff), then 1/48 per month for the next three years. Until month 12, the grant is 0% vested. On the cliff date, 25% vests; each month after adds roughly 2%. Founders often buy restricted stock subject to the same repurchase right that lapses as vesting occurs—functionally a cliff vesting pattern. Boards can approve different cliffs (six months for advisors, none for rare retention grants). Vesting is usually tied to continued service; termination stops the clock unless the plan provides partial acceleration. ISO and NSO option plans must comply with tax rules, but the cliff concept is the same across instrument types.

## Why it matters

- **Founders:** Your headline ownership percentage overstates what you keep if you leave early. Cliffs protect co-founder alignment and are standard in venture term sheets.
- **Operators:** Recruiting conversations should spell out cliff timing so hires understand when equity becomes real. Leaving at month 11 versus month 13 can mean a large difference.
- **Investors:** Term sheets often require founder vesting refresh or re-vesting on investment so prior unvested shares do not create misalignment.

## Common mistake

Assuming vesting starts on the offer letter date rather than the grant start date set in the equity plan—those can differ by weeks and shift cliff timing.

## Related ideas

Cliff unlock, vesting schedule, repurchase right, stock options, and single-trigger versus double-trigger acceleration appear in the same equity conversations.

## FAQ

### What is cliff vesting in simple terms?

You earn nothing for the first stretch—often one year—then a slice vests in one shot. After the cliff, the rest vests in smaller pieces over time.

### Why does cliff vesting matter?

It keeps founders and employees committed through early uncertainty. Investors expect cliffs so teams cannot leave immediately with meaningful ownership.


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Source: https://venturecapitaltracker.com/glossary/cliff-vesting