Definition of common stock


Two important classes of stock are common stock and preferred stock. In general, preferred stock has “rights, preferences, privileges, and restrictions” that common stock does not have. Typically, investors get preferred stock, and founders and employees get common stock (or stock options).

Related terms

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Startups and Growth › Classes of Stock

The exact number of classes of stock and the differences between them can vary company to company, and, in a startup, these can vary at each round of funding.

​confusion​ Another term you’re likely to hear is founders’ stock, which is (usually) common stock allocated at a company’s formation, but otherwise doesn’t have any different rights from other common stock.*