Vesting and cliff

Shares that a co-founder or employee earns over time, with nothing earned before a first milestone (the cliff).

A common startup pattern is four years of vesting with a one-year cliff: leave after six months and you keep nothing, after a year you keep a quarter, then the rest accrues monthly. It protects the company from a co-founder who leaves early with a large stake. The legal mechanics differ by country and company form, so the term sheet idea needs a local lawyer to become a real agreement.

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Related terms

Source code ownership (IP assignment): Who legally owns the code you paid for. In Poland, a contractor’s code becomes yours only through a written transfer of rights.
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MVP (minimum viable product): The smallest version of a product that tests whether people want it enough to use or pay.

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