Fundraising & Securities

Vesting

Also called: Cliff, Reverse Vesting

A schedule under which shares or options are earned over time rather than granted outright.

A common structure is four years with a one-year cliff: nothing vests until the first anniversary, then vesting continues monthly. Founder shares are often subject to reverse vesting, letting the company repurchase unvested shares if the founder leaves early.

Why it matters: without vesting, a co-founder who leaves after a few months can keep a full equity stake, which investors typically treat as a serious problem.

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Vesting — Canadian legal glossary | Lawkin — Lawkin