The process by which an employee or founder earns the right to their equity over time, rather than receiving it all upfront.
Why it matters: Vesting protects the company. If a co-founder leaves after 2 months, vesting ensures they don't walk away with half the company. Standard startup vesting is 4 years with a 1-year cliff.
In practice: A developer is granted 10,000 options over 4 years. After year 1, 2,500 options vest. Then, roughly 208 options vest each month for the remaining 3 years.