Equity
Definition
Equity is ownership in a company, represented by shares. Startup equity comes mainly as common stock (founders, employees) and preferred stock (investors).
How it comes up in fundraising
Fundraising is selling equity for capital; compensation below market is offset with employee equity; every structural decision eventually cashes out through who owns what.
Frequently asked questions
What is the difference between common and preferred stock?
Preferred stock carries investor protections like liquidation preferences and anti-dilution; common stock is what founders and employees hold.
How is startup equity taxed?
It depends on instrument and jurisdiction; in the US, early exercise, 83(b) elections, and QSBS treatment materially change outcomes, so get specific advice early.
Related terms
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