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What is Founder Shares?

Definition

Founder Shares

Founder Shares are the common stock issued to the original creators of a startup during the company's incorporation.

Detailed Deep Dive

Founder Shares represent the core ownership of the company. Issued at incorporation, these shares form the baseline of the cap table and are typically subject to vesting rules to align founder incentives.

Frequently Asked Questions

Q:What class of stock are founder shares?

They are almost always common stock, whereas venture capital investors receive preferred stock.

Q:Do founder shares typically have vesting?

Yes. Even though they are co-founders, investors will require their stock to vest to ensure long-term commitment.

Quick Facts

  • CategoryLegal
  • Key ApplicationCompany formation and early equity allocations

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