Definition
Vesting ensures that equity goes to people who stay and contribute. Standard vesting is 4 years, meaning you earn 25% of your grant per year. The 1-year cliff means if you leave before 12 months, you get nothing. GitDealFlow's team data (contributor count trends) can reveal vesting-related departures.
How it works in practice
Vesting is the mechanism that turns granted equity into owned equity over time, so that ownership is earned through contribution rather than handed over at the door. The standard structure for founders and employees is four-year vesting with a one-year cliff: 25% of the grant vests at the 12-month mark, then the rest vests monthly or quarterly over the remaining three years.
The cliff exists to protect the company: someone who leaves after three months has contributed little and gets nothing; someone who stays a year has earned the first quarter. Unvested shares are typically repurchased by the company at cost when someone departs, keeping equity with the people who remain. Vesting also applies to founders — and founder vesting is one of the things investors verify in diligence, because a founder who owns everything outright on day one has no incentive to stay.
Acceleration clauses change the picture. Single-trigger acceleration vests some or all unvested shares when the company is acquired; double-trigger acceleration requires both an acquisition AND termination (or a similar event). Acceleration is a negotiation: employees want protection, investors want retention. GitDealFlow's contributor data — tracking contributor growth across 4,200+ startups' public GitHub activity — can even reveal vesting-related departures: a sudden drop in active contributors often follows a cliff date.
Key points
- Vesting makes equity conditional on continued contribution over time.
- Standard: 4-year vesting, 1-year cliff, monthly or quarterly thereafter.
- The cliff protects the company from short-term hires and founders.
- Unvested shares are usually repurchased at cost on departure.
- Acceleration (single or double trigger) is a key negotiated term.
Frequently Asked Questions
What is a cliff?
The minimum period before any equity vests. Standard 1-year cliff: if you leave at month 11, you get 0 vested equity. At month 12, you get 25% vested.
How does vesting work for founders?
Founder shares vest on the same logic as employee grants: typically over four years with a one-year cliff, so a founder who leaves in the first year takes nothing. Investors require founder vesting in diligence because it aligns incentives — a fully vested founder can walk away with the equity and leave the company stranded.
What happens to unvested shares when someone leaves?
They are typically repurchased by the company at the original price or cancelled, returning them to the pool for future hires. The leaver keeps only the shares that have vested. This is why vesting protects the company: departing founders or employees cannot walk away with equity they have not earned.
What is acceleration on vesting?
A provision that vests shares faster than the normal schedule when certain events happen. Single-trigger acceleration vests equity automatically at an acquisition. Double-trigger acceleration requires both an acquisition and the holder's termination (or loss of role). Founders and key employees usually want it; investors often resist it because it reduces the retention incentive in the deal that matters most.