What is Common Stock?
Common Stock
Common Stock is the primary class of equity ownership in a startup, typically held by founders, employees, and advisors.
Why It Matters for Startups
Governs the legal rights and ownership distribution of the entity; configuring Common Stock is critical for managing long-term cap table health and alignment during employee stock option pools and founder allocations.
Detailed Deep Dive
Common Stock represents the base equity class of a startup. Held by founders and employees, common stock value depends on achieving an exit value that exceeds the preferred stock liquidation backlog.
Frequently Asked Questions
Q:Does common stock have liquidation preference?
No. In an exit, common stock is only paid out after all preferred stock liquidation preferences have been fully satisfied.
Q:How is common stock valued?
Its value is set through independent appraisals (409A valuations) for tax compliance purposes.
Quick Facts
- CategoryLegal
- Key ApplicationEmployee stock option pools and founder allocations
Coverage Trend12 Weeks
Related Startup Terms
Cite This Term
Reference this definition in your articles, research, or documentation to credit this source:
Common Stock Media Coverage & Intelligence
Intel to Launch $15B Stock Sale Amid AI Boom, Advanced Packaging Demand
Intel Corp. today announced plans to raise $15 billion by selling common stock. The banks underwriting the deal have the option to buy up to $2.25 billion worth of additional shares within 30 days. The offering follows a year in which Intel's stock price more than tripled.