Common stock

The ordinary share class held by founders and employees. Last in line if the company is sold or wound up.

Example

Founder shares and exercised employee options.

Important

Common is paid only after every preference is satisfied. This is why a company can sell for a headline number and the founders still receive very little.

Related terms

• Preferred stock — The share class investors typically receive, carrying rights common shares do not — liquidation preference, anti-dilution and often a board seat.
• Liquidation preference — The right of preferred shareholders to get their money back first when the company is sold, before common shareholders get anything.
• Equity — Ownership in the company, usually held as shares.

Lessons that explain it

• Reading a cap table — Who owns what, in what class, and what happens when the next round lands. (12 min)
• Liquidation preference — The term that decides who gets paid when the company sells — and it matters more than your valuation. (12 min)
• The words everyone assumes you know — Founder vs CEO, shareholder vs employee, customer vs user, revenue vs profit, valuation vs cash, equity vs salary. Twenty minutes here saves a lot of nodding along in meetings. (15 min)

All 176 terms in the Founder glossary