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Equity 101

What Is a Stock Warrant and How Does It Work?

A stock warrant allows the holder to buy or sell shares of stock in the issuing company at a specified price and date. Here’s why companies issue warrants.

What Is a Liquidity Event?

In a liquidity event, a company’s founders and investors turn their illiquid assets into liquid assets. Examples include IPOs and acquisitions. Learn more.

What Is Share Dilution? A Complete Guide for Startups

Share dilution occurs when a company does something to increase its number of shares outstanding. Here’s how it affects existing shareholders and investors.

Phantom Stock Plans: How This Alternative to Real Equity Works

Phantom stock, otherwise known as shadow stock, is a way to compensate employees without granting them actual shares of company stock. Learn more.

Stock Warrants vs. Stock Options: What’s the Difference?

Stock warrants and options both allow the holder to buy or sell shares of stock at a specified price and date. But several key differences set them apart.

What Is Stock Vesting and What Does It Mean to Be Vested?

Most equity grants require a time-based vesting period or set of vesting milestones in order for the employee to become a full owner of the award. Read on.

RSAs vs. RSUs: What to Know About Restricted Stock

RSAs and RSUs are types of restricted stock that work differently in terms of taxes, vesting, and other particulars. See which equity type is right for you.

What Is Rule 144?

SEC Rule 144 is an exemption that allows for the public resale of restricted and control securities if certain conditions are met. Read more about Rule 144.

How Do Stock Options Work?

A stock option is a contract that allows a person to purchase a number of shares of stock at a fixed price. Learn how employee stock options work.

Startup Stock Options: A Simple Guide for Founders and Employees

Startup stock options work similarly to employee stock options at other types of companies. But startups move quickly, and so can the value of your options.

What Is a Tender Offer? How This Liquidity Option Works

A tender offer typically gives shareholders an opportunity to sell some or all of their shares. A company or third party can be the offerer.

What Is a Special Purpose Vehicle (SPV)?

A special purpose vehicle is a separate legal entity created by a parent company. VC investors may use SPVs to invest in individual startups. Here’s how.

What Is Venture Capital and How Does It Work?

Venture capital (VC) provides capital to young startups that have the potential to grow into much larger and more valuable companies over time. Learn more.

Preferred Stock vs. Common Stock: What’s the Difference?

Preferred stock has a higher preference for asset distribution, but common stock may offer more upside. Learn about preferred stock vs. common stock.

What Determines a Stock Option’s Strike Price?

A stock option’s strike price is determined by the fair market value of the underlying stock. Here’s how to find FMV and set the right strike price.

Restricted Stock Units (RSUs) vs. Stock Options: Which Is Better?

Learn about the difference between RSUs and stock options.

What Is ASC 820? A Guide to Measuring Fair Value

ASC 820 standardizes the process of valuing assets and liabilities, so as to ensure that investments are reported at their fair value. Learn more.

What Is Private Equity and How Does It Work?

Private equity is a type of financing in which money is invested into a private company. Read our guide to private equity and venture capital for founders.

What Is a Cap Table? A Guide for Startup Founders

A capitalization table, or cap table, is a table displaying a company’s equity ownership. Learn what every founder should know about cap tables.

What Is Fair Market Value (FMV) and Why Does It Matter?

The fair market value of a private company’s stock is how much one share of that stock would be worth on the open market. Learn more about how FMV works.

What Happens to Equity in a Down Round?

As is true with any funding round, a down round can result in the dilution of equity. But it can have more significant consequences for founders. Read more.

What Are Common Vesting Schedules?

A four-year vesting schedule with a one-year cliff is the most common vesting schedule, but other options may make sense for your startup. Learn more.

What Is Contributed Capital?

Contributed capital is the total amount of money and assets shareholders have invested in a company. Here’s where to find it in your balance sheet.

RSU Tax 101: How Restricted Stock Units Are Taxed

Restricted Stock Units, or RSUs, are taxed at ordinary income tax rates upon vesting. Capital gains taxes may also apply at the time the stock is sold.

What Are Advisory Shares? A Guide for Startups

Advisory shares are a type of equity compensation that startups can give to advisors in exchange for their advice. Learn more in our guide for founders.

What Is the ISO $100K Limit?

The ISO $100K limit prevents employees from taking too much advantage of the tax benefits associated with incentive stock options (ISOs). Learn more.

Modeling Dilution

Planning your company's equity roadmap is important so you don't give away too much of the company in the early days.

Part I: What is Equity, and Why does it Matter? The Startup Founder's Guide to Equity

Keeping your slice of the pie.

Part II: The Equity Terms that Actually Matter for Founders. The Startup Founder's Guide to Equity

Learn about the must-know equity terms for founders.

Part III: Is your cap table broken? Mistakes to avoid. The Startup Founder's Guide to Equity

Is your cap table broken? Find out how to build a strong cap table.

Understanding the difference between ISOs and NSOs

Learn about the different between ISOs and NSOs types of stock options.

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