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Dictionary by pitch.dog
Founder & employee equity · Core

Cliff

Also called: vesting cliff

ELI5

No equity is earned until a first minimum period is completed.

Used in conversation

“The option has a one-year cliff.”

Definition

An initial period during which no equity vests, followed by a first tranche if service continues.

Here “Cliff” means: An initial period during which no equity vests, followed by a first tranche if service continues.

Pitch context

You will see “Cliff” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches founder & employee equity.

Why it matters: In founder & employee equity, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

Connected terms

  • VestingVesting earns equity over time or conditions; a cliff delays the first vesting event until a threshold date.
  • Cliff vestingThe search label “vesting cliff” can route to both entries.
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Sources & evidence · 5

Direct term-level sources and supporting source families.