What Is Vesting Schedule?

The standard startup vesting schedule is a 4-year vest with a 1-year cliff: no equity vests in the first year, then 25% vests at the 1-year mark, and the remaining 75% vests monthly over the following 3 years. The cliff protects the company from early departures receiving a large equity stake. Founders may have vesting imposed by investors to align incentives; employees always have vesting for options or RSUs. Accelerated vesting provisions — single-trigger or double-trigger acceleration — can be negotiated to protect equity in acquisition scenarios. Vesting interacts closely with the 83(b) election, which must be filed at grant, not at vesting.

Vesting schedules protect both the company and the individuals involved. For founders, understanding your vesting — including what happens if you are terminated before full vesting — is critical before signing. For employees, knowing whether your options fully accelerate in an acquisition could significantly affect your payout. A startup attorney can review your vesting terms and explain what you've agreed to.