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Cliff




A "cliff" is a term used in the venture capital and startup industry to refer to a specific condition in an investment agreement. A "cliff" typically refers to a period of time that an employee or founder must work for a company before they are eligible to receive a portion of their equity or stock options.


For example, a vesting schedule might include a "cliff" of 12 months, meaning that the employee will not receive any vested equity until they have worked at the company for 12 months. After that 12 month period, the employee would start vesting their equity on a regular schedule until it is fully vested.


For example, a vesting schedule might include a "cliff" of 12 months, meaning that the founders or employees will not receive any vested equity until they have worked at the company for 12 months. After that 12 month period, the founders or employees would start vesting their equity on a regular schedule until it is fully vested. The idea behind the "cliff" is to give a incentive to the founders or employees to stay with the company for a certain period of time in order to build the company’s value before they can cash in on their equity.

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