dead equity

Definition

Equity allocated to former employees, advisors, or early team members who are no longer contributing to the company but still own shares. It's the corporate equivalent of paying rent for a ghost tenant.

Example Usage

The company had 15% dead equity from co-founders who left in the first year without proper buyback agreements.

Origin

Emerged from cap table management discussions in the 2000s

Fun Fact

Dead equity is one of the main reasons lawyers insist on vesting schedules with cliffs for everyone, including founders.

Source: Equity management and cap table terminology

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