⚖️ Understanding Common vs Preferred Shares

In partnership with

Practical Information - Classes of Shares

In a startup, different classes of shares represent varying levels of ownership, control, and rights within the company. Typically, shares are categorized into common shares and preferred shares. Common shares are usually held by founders and employees, giving them voting rights and a stake in the company’s growth. Preferred shares, often held by investors, come with additional rights like priority in dividend payments or in the event of a liquidation. These different classes allow startups to tailor their equity structure to meet the needs of both founders and investors.

Get your news from the future.

The Oracle by Polymarket is news with skin in the game. This weekly newsletter gives you insights on global headlines from the world’s largest prediction market, powered by traders around the world with millions of dollars on the line.

Subscribe to The Oracle

How Different Share Classes Can Benefit Founders

One famous example is Facebook, which issued multiple classes of shares to retain founder control while raising capital. Facebook created Class A shares, which are publicly traded and come with one vote per share, and Class B shares, which are held by Mark Zuckerberg and early insiders and come with ten votes per share. This dual-class structure allowed Zuckerberg to maintain control over major decisions, even as the company went public and more shares were issued to new investors. This approach is beneficial for founders who want to retain strategic control over their company’s direction while still attracting significant investment.

Balancing the Interests of Shareholders

Venture capitalists (VCs) often prefer preferred shares because these shares offer protections and benefits like liquidation preferences, anti-dilution rights, and dividend priorities. These features ensure VCs can recover their investments or get favourable returns before common shareholders if the company exits or faces financial difficulties. By issuing different classes of shares, startups can balance the interests of various stakeholders—allowing founders to maintain control while providing investors with the security they need to commit capital. It’s crucial for founders to carefully structure their equity offerings, often with the guidance of legal and financial advisors, to align with the company's and its stakeholders' long-term goals.

In addition to our newsletter we offer 60+ free legal templates for companies in the UK, Canada and the US. These include employment contracts, investment agreements and more

Newsletter supported by:

2025 Prediction: A Surge of Self-Serve CTV Buyers

Roku predicts that 2025 will be a breakthrough year for self-serve CTV advertising. Roku Ads Manager makes it easy to integrate CTV into your 2025 marketing mix. Easily segment your target audience, optimize campaigns in real-time, and drive conversions with interactive ad formats and shoppable ads with a Shopify integration. Roku Ads Manager makes CTV advertising accessible and impactful for businesses of any size.

Discover CTV performance on Roku

and by: