Track your equity vesting schedule, visualize cliff periods, and calculate the value of vested and unvested shares over time.
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Formula:
Vested Shares = Total Shares x (Months Vested / Total Months)
Explain Result
Explains what the calculator result means in plain language.
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Add total shares and vesting period to see your schedule
Quick answer
Equity vesting is the process by which you earn the right to own shares or options over time. The startup standard is 4-year vesting with a 1-year cliff: nothing vests for the first 12 months, then 25% vests at the cliff, and the remaining 75% vests monthly over the next 36 months. If you leave before the cliff, you forfeit the entire grant.
Equity vesting is a cornerstone of startup compensation, governing how employees and founders earn ownership in a company over time. According to the National Center for Employee Ownership, an estimated 11 million U.S. employees participate in equity compensation plans including stock options, restricted stock, and employee stock purchase plans. Understanding your vesting schedule is essential for making informed decisions about career moves, financial planning, and negotiating compensation packages.
The standard vesting structure in Silicon Valley and most startup ecosystems is the 4-year schedule with a 1-year cliff, a framework popularized by Y Combinator. Under this arrangement, no equity vests during the first year (the cliff period). At the 1-year mark, 25% of the total grant vests immediately, and the remaining 75% vests monthly or quarterly over the following 36 months. This structure protects companies from employees who leave early while ensuring committed team members build meaningful ownership.
The cliff serves multiple purposes: it creates a trial period where both the company and employee can evaluate fit before significant equity transfers, it protects the cap table from fragmentation by short-tenure employees, and it incentivizes employees to commit to at least a year of service. According to Carta's Founder Ownership Report, among VC-backed two-founder teams incorporated from 2015 to 2024, roughly one in four lost a co-founder by the four-year mark — demonstrating why investors insist on vesting. The 4-year with 1-year cliff structure is the market standard for both founders and early employees.
For founders and early employees, understanding vesting is crucial when evaluating equity splits, negotiating with investors, or planning for potential dilution events. The value of your equity depends not just on the number of shares but on when they vest, how much runway the company has before the next round, and what the company might be worth at each milestone. Use the pre-money valuation calculator and post-money valuation calculator to estimate share value at different stages.
Quick answer
To calculate vested shares on a standard 4-year schedule with a 1-year cliff: nothing vests for the first 12 months. At the cliff, multiply total shares by 0.25 to get the cliff tranche. After the cliff, divide the remaining 75% by 36 to get monthly vesting. Multiply months elapsed (minus 12) by the monthly amount and add the cliff tranche.
Vested Shares = Total Grant x (Months Since Cliff / Remaining Months)
After the cliff period completes:
Monthly Vesting = (Total Grant x 0.75) / 36 months
The total number of shares or options awarded. This is typically expressed as a specific number of shares rather than a percentage to avoid confusion with dilution calculations. Common grant sizes range from 0.01% to 2% of the company for early employees.
The waiting period before any equity vests, typically 12 months. At the cliff, a proportional amount (usually 25%) vests all at once. If you leave before the cliff, you forfeit the entire grant.
The total time over which equity vests, typically 48 months (4 years). After the cliff, remaining equity vests according to your schedule (monthly, quarterly, or annually).
For stock options, this is the price you pay to exercise. It's set at fair market value (409A valuation) at the time of grant. Your profit is the difference between the current share price and your strike price.
Quick answer
Graded vesting releases shares incrementally (typically monthly after a cliff), so you accumulate ownership continuously. Pure cliff vesting is all-or-nothing at a single date. The startup standard combines both: a 1-year cliff followed by monthly graded vesting over the remaining 36 months.
Two primary vesting approaches exist in the startup world: graded vesting (continuous) and cliff vesting (step). Understanding the differences helps you evaluate offers and negotiate better terms.
Most startups use the standard 4-year/1-year cliff model because it balances employee interests (regular vesting after the cliff) with company protection (meaningful commitment required). When evaluating Series A terms, investors typically require this structure for all founder and employee equity.
A senior engineer joins a seed-stage startup with a grant of 50,000 shares (0.5% of the company) at a strike price of $0.10 per share.
Total Grant: 50,000 shares
At 12-month cliff: 12,500 shares vest (25%)
Monthly vesting after: ~1,041 shares/month
If Series A share price = $2.00
Potential gain at cliff: $23,750 ($2.00 - $0.10 x 12,500)
Early employees benefit most from understanding dilution as their percentage ownership will decrease with each funding round.
Two co-founders split equity 60/40 based on their equity split calculation. Both are subject to 4-year vesting with a 1-year cliff.
Founder A: 6,000,000 shares (60%)
Founder B: 4,000,000 shares (40%)
At cliff (Year 1): A = 1,500,000, B = 1,000,000
At Year 2: A = 3,000,000, B = 2,000,000
At Year 4: Fully vested
Even founders vest their equity. If Founder B leaves at Month 10, they receive nothing. If they leave at Month 18, they keep 37.5% of their allocation (1,500,000 shares).
An employee has 20,000 shares on a 4-year vest. The company is acquired at Month 30 for $10 per share. They have double-trigger acceleration.
Vested at acquisition: 15,625 shares (78.125%)
Unvested: 4,375 shares
If retained: continue vesting under new terms
If terminated (double-trigger): 100% accelerates
Total payout if terminated: $200,000
Understanding acceleration terms is critical when evaluating equity dilution from Series A investment terms and acquisition offers.
Quick answer
The most common vesting mistake is confusing vested with exercised. Vested options give you the right to buy shares, but you still must pay the strike price to own them. Other frequent errors: ignoring dilution from future funding rounds, overlooking AMT on ISO exercises, and valuing common stock at the preferred-share price.
Employees and founders both routinely miscalculate the real value of their equity. These are the mistakes we see most often when reviewing term sheets and employment offers.
Vested options give you the right to buy shares at your strike price. You still have to write a check (and often pay taxes) to actually own them. If you leave the company, you typically have only 90 days to exercise vested options before they expire, though some employers now offer extended exercise windows.
Your grant is a fixed share count, not a fixed percentage. Every new funding round dilutes your ownership. Use the dilution calculator to model how your final ownership shrinks across seed, Series A, and beyond. A 1% grant at seed might be 0.4-0.6% by the time of exit.
Most investors strongly prefer double-trigger acceleration (requires both a change of control and a termination) because single-trigger acceleration can reduce the acquisition price. Asking for 100% single-trigger is usually rejected. Double-trigger covering 50-100% of unvested shares is more negotiable, especially for founders and executives.
Exercising Incentive Stock Options (ISOs) does not create regular income tax, but the spread between strike price and fair market value is an Alternative Minimum Tax (AMT) preference item. Employees have been stuck with six-figure AMT bills on paper gains that later evaporated. Model AMT before exercising, and consider exercising early when the spread is zero.
The 409A strike price and the last preferred round price are different numbers. Common stock is typically worth 20-40% of preferred stock because preferred shareholders have liquidation preferences. Do not assume your options are worth the headline Series B price per share.
The calculator tells you where you stand on the schedule. Use this framework to decide what to do with that information.
Nothing is yours yet. Do not factor unvested equity into financial plans or major purchases. If you are considering leaving, the math is straightforward: everything is forfeited. If you are close to the cliff, staying even a few weeks longer can unlock 25% of the grant.
You own something, but a departure still leaves most of the grant on the table. This is the right moment to ask for a refresher grant, especially if the company has grown significantly since your original grant. Also a good time to review your cap table position after any new funding rounds.
Refresher grants matter most here. Without one, your "golden handcuffs" are loosening and the company's retention incentive is fading. If you are a key employee, this is when to negotiate for additional equity tied to the next 4-year refresh.
Focus shifts from earning equity to exercising and selling it. Understand your post-termination exercise window, plan for tax events (especially AMT on ISOs), and evaluate secondary market options if the company has a tender offer program. If you are considering founding your own company, use the burn rate calculator to plan your runway. Coordinate with a tax advisor at least a quarter before exercising large ISO positions.
The 4-year schedule with a 1-year cliff is the market standard for both founders and early employees at venture-backed startups, according to Carta and investor term sheet templates from Y Combinator and Index Ventures. Alternative structures exist but are less common.
48 months
The industry standard. 25% vests at the 1-year cliff, then monthly vesting for the remaining 36 months.
36 months
Used by some startups to compete for talent. ~33% at cliff, then monthly for 24 months.
48 months
Rare, but sometimes used for senior executives or to retain existing employees after acquisition.
48 months
Increasingly popular at growth-stage companies to reduce cliff risk for employees.
Quick answer: how much equity do early employees get?
At the median, the first hire at a startup receives approximately 1.49% equity, the fifth hire receives 0.34%, and the tenth hire receives 0.18%. Grant sizes decrease rapidly because each new hire dilutes the pool less and carries less early-stage risk.
| Hire # | 25th Pctl | Median | 75th Pctl |
|---|---|---|---|
| 1st hire | 0.50% | 1.49% | 4.00% |
| 2nd hire | 0.25% | 0.85% | 2.00% |
| 5th hire | 0.10% | 0.34% | 0.75% |
| 10th hire | 0.05% | 0.18% | 0.50% |
Source: Carta analysis of 50,000+ startup equity grants. Grants assume standard 4-year vesting with 1-year cliff. Actual percentages vary by stage, role, and geography.
Quick answer: how often do co-founders leave?
According to Carta's Founder Ownership Report, among VC-backed two-founder teams incorporated from 2015 to 2024, roughly one in four lost a co-founder by the four-year mark. Attrition accelerates over time: approximately 30% by year 5, 35% by year 6, and approaching 40% by year 8. This data explains why investors universally require founder vesting.
Median founder ownership also declines with each round: approximately 56% at seed, 36% at Series A, and 23% at Series B. Track your ownership through rounds with the dilution calculator and model your pre-money and post-money valuation to understand share value at each milestone.
Source: Carta Founder Ownership Report 2025 — analysis of VC-backed two-founder teams incorporated 2015-2024.
Quick answer
Vesting calculators project when shares vest but cannot predict their value. Key limitations: share value depends on company performance and market conditions, dilution from future funding rounds will reduce your ownership percentage, tax treatment varies by grant type (ISO vs NSO vs RSU), and liquidity is not guaranteed until an IPO or acquisition.
The calculator can project when shares vest, but not what they'll be worth. Startup equity value depends on company performance, funding rounds, and market conditions. Most startup equity ends up worth zero.
Your ownership percentage will decrease with each funding round. Use our dilution calculator to model how future rounds affect your stake. Typical seed-to-Series A dilution ranges from 15-25% per priced round.
ISOs, NSOs, and RSUs have very different tax treatments. The timing of exercise, holding periods, and AMT considerations can significantly affect your net proceeds. Consult a tax advisor for personal guidance.
Company acquisitions, restructurings, or new funding rounds may modify vesting terms. While acceleration clauses protect some scenarios, not all changes are in the employee's favor.
Even fully vested shares may not be sellable. Most startups have restrictions on share transfers, and there may not be a market for your shares until an IPO or acquisition. Secondary markets exist but often have limitations.
For more guidance, see the Valuefy blog.
Pair this tool with the Cap Table Calculator, Dilution Calculator, and Series A Calculator to model your full equity picture from grant through exit. You can also explore the Startup & Fundraising tools hub for runway, burn rate, and funding calculators.
The industry standard is 4-year vesting with a 1-year cliff. At the cliff, 25% vests immediately, then the remaining 75% vests monthly over 36 months. This structure balances retention with fair compensation.
Leaving before your cliff means forfeiting your entire equity grant. Time your career decisions around vesting milestones, especially the cliff, to maximize your equity value.
Understand the difference between vested and exercised. Vested options give you the right to buy shares; you still need to exercise (pay the strike price) to actually own them.
Acceleration clauses (single-trigger or double-trigger) can protect your equity in acquisition scenarios. Negotiate for these protections, especially at the executive level.
Your vesting schedule works alongside dilution and equity allocation to determine your final ownership. Model all three together for realistic expectations.
Sources and Further Reading: