Common Stock
Definition
Common Stock: Common stock is the standard ownership class, typically held by founders and employees. Common shareholders have voting rights but are last in line for proceeds after preferred shareholders in a liquidation. Stock options typically convert to common stock when exercised.
Example Usage
“As a founder, I hold common stock, while our VCs hold preferred stock with liquidation preferences.”
Common Misconceptions
Related Terms
Preferred Stock
Preferred stock is a class of ownership with rights superior to common stock, typically held by investors. Preferences usually include liquidation pre...
Stock Options
Stock options give employees the right to purchase company shares at a fixed price (strike price) after vesting. Options are a common form of equity c...
Equity
Equity represents ownership in a company, typically through shares of stock. Founders receive equity at formation, employees through stock options, an...
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