How startup equity vesting works

Vesting is the schedule on which you earn your equity over time. Getting it right matters, because it decides how much you actually own — especially if you leave. Here's the plain-English version.

What's it worth?A realistic range in seconds.
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Cost to exercise?Exercise cost — plus the AMT hit (US).
Exercise & AMT →

Where to sell?Every route to a buyer, plus a directory.
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The standard schedule

The most common startup vesting schedule is four years with a one-year cliff. The "cliff" means you earn nothing until your first anniversary, at which point 25% vests in one lump; after that the rest vests gradually (usually monthly or quarterly) over the remaining three years. Leave before the cliff and you typically keep nothing; leave after, and you keep what has vested to that date.

Vesting vs owning vs being able to sell

Three different things people conflate:

Vested means you've earned the right to your options or shares.
With options, vested still means you usually have to exercise (pay the strike) to own actual shares.
Owning shares still doesn't mean you can freely sell them — transfer restrictions and company approval apply.

So "I'm fully vested" is the start of the story, not the end. See what exercising costs and where to find a buyer.

What happens when you leave

You keep what's vested; you lose what isn't. With options, there's usually a post-termination exercise window — often around 90 days — to exercise your vested options or lose them. That deadline, plus the cash and tax cost of exercising, is one of the most consequential decisions a leaver faces. Don't let the window lapse by accident.

Acceleration and lock-ups

Acceleration clauses can vest equity early on certain events — most often an acquisition (single- or double-trigger). A lock-up is different: it restricts when already-owned shares can be sold, commonly for a period after an IPO or within a secondary. Vesting controls when you earn; a lock-up controls when you can sell.

Papering a grant? Vesting, transfer restrictions and acceleration are things to get right in the equity agreement itself — that's a job for a startup-equity lawyer, not a template.

Know exactly what you've earned

The equity toolkit helps you read your grant — vested vs unvested, your exercise window, strike and class — and turn it into a clear picture of what you own and what to do next.

See the equity toolkit →

Want it on your own numbers? The Personalized Equity Report models your specific grant end to end.

Questions people ask

What does a four-year vesting with a one-year cliff mean?

You earn nothing for the first year; on your first anniversary 25% vests at once (the cliff); then the remaining 75% vests gradually, usually monthly or quarterly, over the next three years. Leave before the cliff and you typically keep nothing.

What happens to my vested options when I leave?

You keep what's vested and lose what isn't. With options there's usually a post-termination exercise window — often around 90 days — to exercise your vested options or forfeit them. Mind that deadline and the cost and tax of exercising.

Is being vested the same as owning shares I can sell?

No. Vested options still usually have to be exercised (paying the strike) to become shares, and owning shares still doesn't mean you can freely sell them — transfer restrictions and company approval normally apply.