Common Stock

Also called Common Shares

The basic ownership shares held by founders and employees (through options). Common sits behind preferred in a payout and carries fewer special rights.

Why it matters

Founders and the team own common, so its value depends on what is left after preferred takes its cut. Understanding that gap is key to reading what your equity is really worth in different exit scenarios.

For example

The founders and every employee with options hold common stock, which pays out only after the preferred investors take their liquidation preference in a sale.

Related terms

Preferred Stock Liquidation Preference ESOP

Go deeper

See how founders actually handle this on Raising your first round, part of the Starting Up hub.

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