Common stock is the basic ownership share class issued to founders and employees, while preferred stock is the separate class issued to investors. Preferred carries additional economic and control rights, most notably a liquidation preference, anti-dilution protection, and specific voting and consent rights. In a startup, both share classes represent ownership in the same company, but they pay out differently in an exit and vote differently on key decisions.
Founders and employees hold common stock from day one (or options that exercise into common). Investors in priced rounds receive Series Seed Preferred, Series A Preferred, Series B Preferred, and so on, each typically with its own terms. The standard preferred ...