Unregistered Securities refer to securities that have not been registered with the appropriate regulatory authorities, such as the Securities and Exchange Commission (SEC) in the United States. Startups often issue unregistered securities during their early stages of funding, typically in private investment rounds, to raise capital from a select group of investors.

Unregistered securities are commonly offered through private placements or other exempt offerings, which allow companies to raise funds without having to comply with the extensive registration requirements and disclosures mandated for public offerings. These securities are typically sold under exemptions provided by securities laws, such as Regulation D in the U.S., which enables startups to raise capital from accredited investors and a limited number of non-accredited investors.

It's important to note that investing in unregistered securities carries certain risks for both the company issuing the securities and the investors. Startups offering unregistered securities may face legal and regulatory challenges if they fail to comply with applicable securities laws. On the other hand, investors in unregistered securities may face limited liquidity and a lack of transparency compared to publicly traded securities.

One key aspect to consider with unregistered securities is the potential for resale restrictions. Due to their unregistered status, these securities are subject to limitations on their transferability and resale. Investors may be required to hold onto their investment for a specified period or seek an exemption from the registration requirements when selling their securities.