Tools for Founders & Investors
Protects investors from their ownership stake being diluted by future financing rounds at a lower valuation. The two main types are "full ratchet" and "weighted average."
The governing body of a company. Investors, especially lead investors, often require a seat on the board.
A spreadsheet that shows the equity ownership of a company, including all founders, investors, and employees with stock options.
A provision that allows majority shareholders to force minority shareholders to join in the sale of a company.
Determines the payout order in a "liquidity event" (like an acquisition or IPO). Investors with a liquidation preference get their money back before other shareholders.
Gives an investor the right to participate in subsequent funding rounds to maintain their percentage ownership in the company.
Gives investors veto power over certain major company decisions, such as selling the company or issuing more senior securities.
The process by which founders and employees earn their stock over time. A typical vesting schedule is 4 years with a 1-year "cliff," meaning no stock is owned until the one-year mark.