Dead Equity
Definition
Dead Equity: Dead equity is ownership held by people no longer contributing to the company, such as departed co-founders who vested shares. It can demotivate current contributors and complicate fundraising if significant ownership is inactive.
Example Usage
“Our departed co-founder holds 15% dead equity, which we couldn't buy back without their agreement.”
Common Misconceptions
Related Terms
Vesting
Vesting is the process by which employees earn their equity over time. The standard vesting schedule is 4 years with a 1-year cliff, meaning no equity...
Cliff
A cliff is a period of time, typically one year, that an employee must work before any equity vests. If they leave before the cliff, they forfeit all...
Cap Table
A capitalization table (cap table) is a spreadsheet or database showing the equity ownership of a company, including shares held by founders, employee...
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