Vesting Schedules Explained: Cliffs, Accelerations, and What They Mean

Vesting is one of those topics that sounds complicated until someone explains it plainly. Most founders understand the concept — equity earned over time — but the details matter, especially when someone leaves, gets acquired, or is fired. Here's what you need to know.

The Standard: 4 Years, 1-Year Cliff

The default vesting schedule you'll see in nearly every US startup is:

• Total vesting period: 4 years
• Cliff: 1 year
• After cliff: Monthly vesting for the remaining 3 years

What this means in practice: if you grant someone 48,000 shares, they get nothing if they leave before their one-year anniversary. On that anniversary, they vest 12,000 shares (25%) at once — that's the cliff. After that, they vest 1,000 shares per month for 36 months until the full 48,000 are vested.

The cliff exists to protect the company from someone leaving in month three with a meaningful chunk of equity and no real contribution to show for it.

Why Founders Also Vest

First-time founders often assume vesting is just for employees. It's for you too — and for a good reason.

Co-founder vesting protects each founder from the other. If your co-founder leaves after 14 months, their unvested shares should either be repurchased or returned to the option pool. Without founder vesting, they walk away with 50% of the company even if they contributed for just over a year. Investors know this and will often require founder vesting as a condition of an early investment.

Founders Often Have Partial Credit at Series A

If you've been working on the company for 18 months before raising your first round, it's common to negotiate credit for the time already worked. Instead of starting a fresh 4-year vesting clock, you might vest from the effective founding date — meaning you're already 18 months into your 4-year schedule.

Acceleration: What Happens at Acquisition

Acceleration clauses kick in and allow unvested equity to vest immediately under specific conditions. There are two types.

Single Trigger Acceleration

A single trigger vests equity upon one event — most commonly, an acquisition or change of control. If someone has 12 months of unvested equity remaining and a single trigger clause, all 12 months vest the moment the acquisition closes.

The problem with single trigger: Acquirers hate it. If all employees vest immediately at acquisition, the acquirer has no retention incentive. Most investors and acquirers will push back on single trigger clauses for employees (though founders sometimes negotiate them).

Double Trigger Acceleration

Double trigger requires two events: (1) an acquisition or change of control, and (2) the employee is terminated or has their role significantly changed (constructive dismissal). Both events must happen for acceleration to kick in.

This is the standard clause for employees, and it's the right one. It protects employees who are let go after an acquisition while allowing the acquirer to retain those they want to keep.

Summary:

• Single trigger: vests on acquisition alone — rare, acquirer-hostile
• Double trigger: vests on acquisition + termination — standard, reasonable

Cliff Vesting vs. Graded Vesting

Everything above is graded vesting — shares become available incrementally over time. Some plans use cliff vesting, where all shares vest at once on a specific date. Cliff-only vesting without graded monthly release is unusual for standard equity grants and creates problems (a person vesting fully on their anniversary with no ongoing incentive).

In practice, the 1-year cliff followed by monthly graded vesting is what you want.

The Unvested Share Problem

When someone leaves before they're fully vested, what happens to their unvested shares? It depends on your plan documents, but typically:

• Unvested shares return to the option pool (making them available for future grants)
• Vested options must be exercised within a window — typically 90 days — or they expire

The 90-day exercise window is increasingly seen as punitive, especially for long-tenured employees who may not have the cash to exercise options that require a significant outlay. Some companies extend this window to 1-5 years or longer. If you're thinking about employee equity seriously, it's worth discussing with your lawyer.

---

The core principle behind all of this is alignment: equity should accrue to people proportional to their ongoing contribution. The mechanics of vesting schedules are just tools to enforce that principle cleanly.