Common? Preferred? Founder? Making Sense Of Startup Shares

2 min read

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…...

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Amit Garg I have been in Silicon Valley for 20 years -- at Samsung NEXT Ventures, running my own startup (as of May 2019 a series D that has raised $120M and valued at $450M), at Norwest Ventures, and doing product and analytics at Google. My academic training is BS in computer science and MS in biomedical informatics, both from Stanford, and MBA from Harvard. I speak natively 3 languages, live carbon-neutral, am a 70.3 Ironman finisher, and have built a hospital in rural India serving 100,000 people.