Common? Preferred? Founder? Making Sense Of Startup Shares

1) Preferred vs Common Historically there have been two types of stock: preferred and common. Preferred is for investors, common for everyone else including founders. When a company has an exit, preferred gets paid first before common. Investors in later rounds typically have higher preference. Two examples below recap how these dynamics work at a high level: Example 1: a bad exit. A company raised $10M in the A, $20M in the B, and was sold for $25M. The B series holders get their $20M back, the A series holders get $5M, no one else gets anything. Example 2: a…...