Startup equity is ownership in a startup, expressed as shares of stock or rights to shares such as options, warrants, and SAFEs. It is divided across three main groups over the company's lifetime: the founders, the employees, and the outside investors. It is the currency of a venture-backed company, used to align everyone who builds the business with the financial outcome of the business.
A typical venture-backed cap table separates equity by class and by holder. Founders are issued founder common stock at incorporation, usually subject to a four-year vesting schedule with a one-year cliff. Employees receive stock options drawn from an option pool that typically represents 10 to 20 percent of fully diluted shares at the first...