Why is equity vesting structure so important for early startup hires?

Description:

As an early-stage hire evaluating offers that include stock, the vesting schedule, cliff, acceleration clauses, and dilution mechanics feel confusing. Why is the vesting structure such a critical part of compensation for early employees, how can different terms affect long-term payoff and career mobility, and what specific provisions:length, cliff, single vs double-trigger acceleration, repurchase rights, etc., should candidates prioritize or try to negotiate?

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Leonardo Franklin 14 Aug 2025

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Cliff length is small potatoes next to taxes and exercise window, file 83(b), push for double-trigger and pro rata rights
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Lydia Nelson 11 Aug 2025

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Vesting matters because it shapes how much of the upside you actually capture and how easily you can walk away if things go south. I look beyond just years and cliffs and ask how vesting interacts with real events. Milestone or hybrid vesting can make sense if your role is launch-heavy. Watch repurchase terms closely. If the company can buy back vested shares at a low price after you leave, that kills value. Ask for clear, narrow definitions of "cause" and "termination" and insist vested equals retained at fair market value. Finally, get a simple cap table model showing expected dilution at realistic raises and exits.
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