A cliff is usually the one-year starting period of the vesting schedule when no options are vested. Simply put, an employee has to be employed for at least one year to earn the first proportion of equity.
Why is it important?
This allows startups to avoid giving stock options too fast to mis-hires. It’s also a well-founded strategy to retain key employees and motivate them to stay with the company and contribute to the startup’s long-term growth.
