A vesting cliff is a period at the very start of a vesting schedule during which nothing vests at all. Leave before the cliff date and you walk away with zero equity. Stay past it, and the first block of your equity vests at once, typically a quarter of it, with the rest vesting gradually after that.
That is the whole mechanism. One date, binary outcome. And yet it is one of the most important lines in any founder agreement.
The scene where the cliff earns its keep
Two cofounders start building in January. They agree on a 50/50 split, shake hands, and get to work. In August, one of them gets a job offer she cannot refuse. She leaves. Politely, on good terms, seven months in.
Without a cliff, she may credibly claim a meaningful slice of the company for seven months of part-way work, while the remaining founder faces years of building with a ghost on the future cap table. With a standard one-year cliff, the answer is already written down and nobody has to negotiate it during a breakup: she left before the cliff, nothing vested, everyone knew the rule on day one.
The cliff is not a punishment. It is the trial period of the founder deal: the written version of "let's make sure this partnership is real before it becomes permanent."
Equity is earned by staying. The cliff simply writes that down.
The standard, and why it exists
The market standard is a four-year vesting schedule with a one-year cliff: 25% of your equity vests on the first anniversary, and the remaining 75% vests monthly over the following three years.
Why one year? Because it is long enough to reveal whether someone is truly committed (through the unglamorous middle stretch where the initial excitement is gone and the traction has not arrived yet) and short enough not to feel like indentured servitude. Investors expect it. Accelerators assume it. Deviating from it is possible, but it should be a decision, not an accident.
Before incorporation: a cliff on a promise
Founder Notes readers will recognize the distinction: before your company exists, there are no shares, so nothing can legally "vest" yet. What you have at that stage is intended equity: the founder promise.
A cliff in a pre-incorporation founder agreement therefore works as a condition on that promise: if a founder leaves before the cliff date, their intended equity returns to the pool, and everyone has agreed to that in writing before it happens. When you later incorporate, the same schedule carries into the stock purchase agreements, usually as reverse vesting on issued shares, and the clock you started early gets honored.
This is one of the strongest arguments for writing the founder agreement early: the cliff protects you most in the messy first year, which is precisely the period most teams spend without any paperwork at all.
When it is fair to deviate
Three deviations come up constantly, and two of them are healthy:
- Backdating the vesting start. If you have genuinely been building together for eight months before signing, it is fair to credit that time: start the vesting clock at the real start date, not the signature date. The cliff then measures true commitment, not paperwork timing.
- A shorter cliff for a proven partnership. Cofounders who have already shipped products together for years sometimes agree on a six-month cliff. Reasonable, if it is a conscious choice.
- No cliff at all. Rarely justified. "We trust each other" is exactly what every team says in month one, including the ones that end up in disputes by month nine.