Glossary

Vesting, ESOP & Cliff

In the startup context, vesting is a period of time during which stock options granted to team members as part of their compensation are gradually released.

Feb 8, 2025alejandro-gonzalezredwood-ventures

How do Vesting, ESOP & Cliff work?

In the startup context, vesting is a period of time during which stock options granted to team members as part of their compensation are gradually released.

An ESOP is a portion of shares set aside for employees as an incentive in addition to their salary.

The cliff is the period of time that must pass before an employee's first shares are released. If the employee were to leave the company before this period, they would receive no compensation.

Back to glossary

Keep exploring

Startup

A startup is an innovative company designed to grow exponentially and scale across multiple markets. In its early stages, it will face considerable uncertainty about the ideal product and business model to support that growth and scalability.

Feb 8, 2025

Accelerator and incubator

A business accelerator helps other companies grow in their early stages. An incubator, on the other hand, supports projects at the idea stage and helps them turn that idea into a product.

Feb 8, 2025

Annual Recurring Revenue

Annual Recurring Revenue, or ARR, means annual recurring revenue. It is the total amount of predictable, recurring revenue a startup generates from its customers each year.