Vesting

Vesting is the schedule on which a person earns the right to keep granted equity. Unearned shares or options are forfeited and returned to the company if the recipient leaves before the schedule is complete. It applies to founders, employees, advisors, and (rarely) board members, and exists to make sure equity rewards people who stay and contribute over multiple years rather than people who took a grant and left.

The standard startup vesting schedule is four years with a one-year cliff: nothing vests for the first 12 months, then 25% vests on the cliff date, and the remaining 75% vests in equal monthly increments over the next 36 months (1/48th of total per month). The cliff is binary: leave on day 364 and you walk away with zero; leave on day 366 and you keep a year's worth. This structure has been industry-standard since the late 1990s, codified by the early NVCA and Silicon Valley law firm templates (Cooley, Wilson Sonsini, Goodwin, Gunderson), and is now the assumption built into Carta, Pulley, and every other cap-table tool.

The mechanics differ slightly by grant type:

Restricted stock (founders, sometimes early employees): shares are issued at grant but are subject to a company repurchase right at the original purchase price (typically $0.0001/share) on any unvested shares if the recipient departs. File 83(b) within 30 days to lock in tax basis at grant value.

Stock options (most employees): options are granted with a vesting schedule; only vested options can be exercised. Post-termination exercise window (PTEW) is typically 90 days from departure, though some companies extend to 7 or 10 years (Pinterest, Quora popularized longer windows; market is split).

RSUs (later-stage / pre-IPO): units vest on the schedule but typically have a "double-trigger" structure where shares aren't actually issued until both time-based vesting AND a liquidity event (IPO or acquisition) occur. Standard at companies like Stripe and SpaceX where IPO is delayed.

Acceleration: separate mechanic layered on top of vesting. Single-trigger acceleration vests on change of control alone (acquisition); double-trigger vests on change of control AND involuntary termination within a defined window (typically 12 months post-deal). Double-trigger is more common because acquirers prefer it (founders/employees stay through integration).

Common variants worth knowing:

• Six-year vesting with longer cliffs at some later-stage companies and most law firms (Snowflake, Stripe used 6-year for some grants; not standard).
• Performance-based vesting for executives at later stages (tied to revenue, IPO price, or other milestones).
• Back-loaded vesting (e.g., 10/20/30/40 over four years), popularized by Amazon for employees; rare in venture-backed startups.
• Vesting credit for founders who worked pre-incorporation (negotiated case-by-case; typically 6-12 months credit if work was meaningful).

Worked example: a new hire's 4-year option grant, month by month. Engineer joins a Series A company. Grant: 10,000 stock options at a $1.00 strike price (the 409A fair market value at grant). Schedule: standard 4-year, 1-year cliff, monthly vesting after.

Departure timing	Vested options	Notes
Month 6	0	Pre-cliff. Walks away with nothing, even though they did six months of work.
Month 12 (cliff date)	2,500	25% vests as a single block.
Month 24	5,000	50%. Two more years of vesting still to go.
Month 36	7,500	75%. The "golden handcuffs" year. Most retention loss happens here.
Month 48	10,000	Fully vested.

The trap most employees miss: the 90-day post-termination exercise window (PTEW). If the engineer leaves at month 36 with 7,500 vested options at a $1 strike, they have 90 days to come up with $7,500 cash to exercise. If the company is venture-backed and not yet liquid, that cash buys options that may be worth $0 if the company fails or that may require an additional $30K+ of taxes (AMT on the spread between strike and 409A at exercise) before they're sellable. Employees who can't or won't write that check forfeit the options entirely. This is the single largest hidden cost of joining a venture-backed startup, and it's why some companies (Pinterest, Quora, Coinbase) now offer extended PTEWs of 7 to 10 years.

What founders get wrong (specific failure mode): A two-cofounder company at formation. They skip vesting because "we trust each other." Cofounder B leaves at month 11 to take a corporate job. Cofounder A is now running the company solo with 50% of the cap table held by an absent ex-cofounder who didn't sign a vesting agreement. At Series A, investors require Cofounder A to negotiate a buyout with Cofounder B (or impose retroactive vesting), which costs equity, legal fees, and 3-6 months of fundraising delay. The "we trust each other" version cost more equity than the standard four-year vest would have. Every time.

The vesting family (which entry to read for which question)

Vesting is the parent concept; several closely related entries cover specific pieces of the mechanic. Read this entry first, then go deep where you need to:

• Vesting Cliff: the binary 12-month threshold and why it exists.
• Founder Vesting: the founder-specific structure and why investors require it.
• Reverse Vesting: when already-issued founder stock becomes subject to vesting after the fact (the "reverse" part).
• Vesting Acceleration: provisions that speed vesting on specific events.
• Single-Trigger Acceleration: acceleration on change of control alone.
• Double-Trigger Acceleration: acceleration on change of control plus involuntary termination (the more common form).

Related: Vesting Cliff · Founder Vesting · Reverse Vesting · Vesting Acceleration · Option Pool · Cap Table · 83(b) Election

FAQ

What is the standard startup vesting schedule?
Four years with a one-year cliff. Nothing vests in year one; on the cliff date, 25% vests at once; the remaining 75% vests monthly (1/48th of total per month) over the next three years. Industry-standard since the late 1990s and built into every cap-table tool and law-firm template.

Do founders have to vest their own stock?
At a venture-backed company, almost always yes. New investors typically require founders to re-vest some or all of their shares over four years as a closing condition of the first priced round. Skip vesting at formation and you'll be negotiating it under pressure later, usually on worse terms.

What is an 83(b) election?
A tax election filed with the IRS within 30 days of receiving restricted stock. It lets you pay tax on the value at grant (usually near zero for founder stock) rather than on the much higher value as the stock vests over four years. The 30-day window is irreversible; missing it can create a six- or seven-figure tax bill at exit. See 83(b) Election for the details.

What happens to unvested equity when someone leaves?
For restricted stock, the company exercises its repurchase right at the original purchase price and the shares return to the option pool (or the founder pool). For options, unvested options are forfeited immediately. For RSUs, unvested units are cancelled. In every case, the unvested portion goes back to the company; the departing person walks with only what vested.