A cliff is the minimum period that must elapse in a vesting schedule before any equity rights are acquired. During the cliff, the employee or founder holds no vested rights regardless of tenure. At the cliff date, a lump sum of rights vests immediately (typically 25% of the total), with the remainder vesting monthly over the residual period. A 1-year cliff is the market standard for founders and key employees in venture-backed companies — it protects investors and remaining co-founders against very early departures (less than 12 months) that would otherwise leave unvested shares with a departed person.

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Example: a co-founder receives 400,000 shares with a 4-year vesting schedule and 1-year cliff. If they leave at month 10: 0 shares vested (before cliff) — the company can repurchase all 400,000 shares at nominal value. At month 12: 100,000 shares vest immediately (25%). Then 8,333 shares vest monthly for 36 more months. At month 30: 100,000 + (18 × 8,333) = 250,000 shares vested — 62.5% of the total, reflecting 2.5 years of the 4-year commitment.

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Hectelion structures cliff provisions in shareholders' agreements for fundraising and LBO management packages, balancing investor protection with fair founder treatment.