Designing Your Company's Vesting Schedule

This is a policy decision you make once for your whole team — here's why most startups land on the same default.

As a founder, "what does vest mean" isn't your question — you're deciding what vesting terms to set for your entire team, and whether the industry-standard default actually fits your situation.

Why Four Years With a One-Year Cliff Became the Standard

The one-year cliff protects the company from granting meaningful equity to someone who leaves within months; the four-year total period matches typical retention goals and investor expectations. Deviating from this without a strong reason can raise questions during diligence.

When It Makes Sense to Deviate

Some founders shorten the cliff for senior hires who negotiate hard, or extend total vesting for later grants to preserve runway on the option pool. Any deviation should be deliberate and documented — inconsistent terms across similar hires create both morale and legal risk.

• 4 years / 1-year cliff is the default for a reason — don't deviate casually
• Document any exceptions explicitly in the specific grant agreement
• Inconsistent terms across similar roles are a common diligence red flag

Frequently Asked Questions

Do I have to use the standard 4-year, 1-year cliff schedule?

No, it's a convention, not a legal requirement. Many investors and advisors expect it, though, so deviating without a clear reason can raise questions during future fundraising diligence.

• Document why any deviation exists, at the time you grant it
• Keep terms consistent across similarly situated hires
• Investors will ask about unusual vesting terms during diligence

Should later hires get different vesting terms than early ones?

Sometimes — later hires often join with less risk and may negotiate shorter cliffs or accelerated schedules. Just make sure any differences are intentional and don't create unexplainable inconsistency across your cap table.

• Tie any variation to a specific, defensible reason
• Keep a written policy, not just ad hoc deal-by-deal decisions
• Review your overall vesting terms before each new funding round

The Lovie Advantage

Internal Link: Lovie Cap Table Management lets you set a default vesting policy once during formation and apply it consistently to every grant, while still flagging any exceptions clearly for future diligence.

Setting terms for a non-employee advisor instead of a full-time hire? See Internal Link: Vesting Terms for Advisors and Board Members — the norms are different. For general context on equity plan design, the National Venture Capital Association's model legal documents is a useful reference.

Set Your Vesting Policy in Lovie

Configure your standard schedule once, applied consistently to every new hire. Start Free with Lovie