Cliff
What Cliff means, where you will meet it and what it means for your business.
DefinitionA cliff is the initial period in an ESOP or founder vesting schedule, usually one year, during which no shares vest at all; on the cliff date the first tranche vests together.
The cliff protects the company from an employee or co-founder who leaves within months but still walks away with equity. In a typical four-year schedule with a one-year cliff, nothing vests for twelve months, then 25% vests on the first anniversary, and the rest vests monthly or quarterly over the next three years. Indian law requires a minimum one-year gap between grant and vesting for company ESOPs, so the one-year cliff is standard here. You meet it in your ESOP grant letter and in the founder vesting clauses of a shareholders agreement. If you leave before the cliff, you get nothing; leave the day after, and the first tranche is yours to exercise within the window the scheme allows.
Where you will meet this term
- ESOP Planning & StructuringPrivate Limited Companies that want to hire with equity: pool sizing, a scheme the board can approve, the MGT-14 filing and grants that hold up at exit.from ₹39,999
- CFO ServicesFunded startups and growing companies that need a finance head for a few hours a week: runway, board packs, budgets and fundraise support, without a full-time hire.from ₹24,999/month