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Definition of Unvested Equity

Unvested equity is equity that remains subject to forfeiture or buyback from the startup that issued the equity. For example, a founder may be granted 2M shares of stock subject a 4 years with a 1-year cliff vesting schedule. If the founder leaves the company after 2 years, then 50% of the equity would be fully vested but the rest would remain unvested, and thus subject to forfeiture or buyback, depending on the terms of the founder's restricted stock purchase agreement.

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