The process by which someone earns their ownership over time, rather than receiving it all at once.
Vesting is the process of earning ownership over time rather than receiving it all at once. In a startup context, founder and employee equity is typically subject to a vesting schedule that determines how much ownership has been earned at any given point.
The most common structure is four years with a one-year cliff. Nothing vests during the first year. After 12 months, 25% vests immediately (the "cliff"). The remaining 75% vests in equal monthly installments over the next 36 months. At the end of four years, 100% of the granted equity is fully vested.
Vesting protects everyone on the team. If a cofounder leaves early, vesting ensures they only keep the equity they've earned through their time and contribution. Without vesting, a departing cofounder keeps their full stake regardless of how long they stayed. Most investors expect founder vesting to be in place before investing.