A board of directors is the elected body that governs a corporation, overseeing executives, approving major decisions, and bearing fiduciary duties to shareholders. Board-approved decisions include financings, acquisitions, executive hires, option grants, annual budgets, and dividend declarations. Venture-backed startup boards typically combine founders (1 to 2 seats), institutional investors (1 to 3 seats depending on funding rounds), and independent directors (0 to 2 seats added over time). It is the governance layer above executive management and below shareholders, and the body whose composition often matters more to founder control than the cap table alone suggests.
The typical venture-backed startup board evolution:...
Voting rights are the contractual rights of each share class to vote on corporate matters such as director elections, mergers, and charter amendments. They are typically structured as one vote per share for common and vote-as-converted for preferred, with separate class votes and supermajority thresholds creating control structures that can diverge significantly from raw ownership percentages. It is the mechanic by which equity ownership translates (or fails to translate) into governance control.
The structural layers of voting rights in a typical venture-backed cap table:
An S Corporation is a US federal tax election that allows a domestic corporation or LLC to pass profits and losses through to shareholders. Named after Subchapter S of the Internal Revenue Code, the election is not a separate entity type but a tax classification that avoids the double taxation C-corporations face. S-corp status is subject to restrictions on shareholder type, count (100 maximum), and stock structure (one class only) that make it largely incompatible with venture-backed startups. It is a popular structure for small businesses with US-citizen owners and incompatible with the cap-table realities of most institutional fundraising.
The restrictions that disqualify most venture-track startups: maximum 100 shareholder...
The VP of Sales is the senior executive responsible for building the sales organization and scaling from founder-led selling to a repeatable rep-led motion. Sometimes called Head of Sales, Chief Revenue Officer, or Chief Commercial Officer at scale. The VP-S hires and manages sales reps and sales managers, owns revenue targets and forecasting, partners with marketing on demand generation, and partners with product on what customers want. The hire is one of the most-common executive hiring mistakes founders make because companies often hire VP Sales before the underlying sales motion is repeatable, leading to expensive failures. It is one of the highest-leverage hires when timed correctly and one of the most-expensive mistakes when ...
Growth equity is private investment in established but still-growing companies, typically structured as minority stakes (10-40% ownership). Target companies have proven business models and meaningful revenue ($20M-$200M typically) and are often profitable or near-profitable. The capital is used to accelerate growth in working businesses rather than to fund risky early-stage development, with growth equity sitting between venture capital (earlier stage, smaller checks, higher risk) and private equity buyouts (control investments, often debt-heavy, mature companies), and being the dominant capital source at growth-stage tech companies. Growth equity firms include General Atlantic, Insight Partners, Summit Partners, TA Associates...
Quick pointer: this entry focuses on the tax-advantaged characteristics of founder-issued common stock (QSBS, 83(b), capital-gains holding-period math). For the structural setup at formation (RSPA, vesting, repurchase rights, the share split), see [Founders Stock].
Founder shares are the formation-stage common stock whose tax-advantaged characteristics convert a tiny dollar investment into a potentially massive tax-advantaged outcome. Those characteristics are Qualified Small Business Stock (QSBS) eligibility under §1202 (up to $10M-$15M or 10x basis excluded from federal capital gains per founder, with post-OBBBA stock issued after July 4, 2025 getting the $15M cap, a $75M gross-assets ceiling, and tiered holding periods),...
A stock option is the contract granting the right to purchase common stock at a fixed strike price for a defined period. It is used as the primary equity-compensation mechanic at venture-backed startups, vesting over time (typically 4 years with a 1-year cliff) before becoming exercisable. It is the standard structure for employee equity in C-corp startups, distinct from outright stock grants because the employee must pay to convert the option into actual shares.
The mechanic of a stock option:
Venture debt is a type of loan extended to venture-backed startups by specialized lenders. Lenders are banks and non-bank lenders focused on the venture market, with loans typically structured as 24-48 month term loans with monthly principal and interest payments and warrants attached giving the lender a small equity upside (typically 0.5-2% of the loan amount as warrant coverage). It is used as runway extension between equity rounds or as supplemental capital to a recent equity raise without the dilution of additional equity financing. It is the most-misunderstood form of startup capital, with founders consistently underestimating both its utility (when it works) and its risks (when it doesn't).
The structural mechanics: typic...
Early exercise is the action of exercising stock options before they have vested. The holder pays the strike price on unvested options and receives restricted stock subject to the company's right to repurchase the unvested shares at strike if the holder departs. It is a tax-planning move that starts the long-term capital-gains and QSBS holding clocks earlier, paired with an 83(b) election filed within 30 days of exercise. It is a powerful structural move when used correctly and a cash-binding mistake when used without understanding the implications.
The mechanic of early exercise:
The ask is the pitch-deck slide stating the round size, valuation range, use of funds, and milestones the capital will achieve. It states exactly what the founders are asking the investor for: the round size (how much capital total), the valuation range (sometimes via a SAFE cap or convertible note), the use of funds (how the capital will be deployed), the milestones the funding will achieve, and the resulting runway. Typically the final slide of the deck, it closes the conversation by giving the investor a concrete decision to make. It is the slide most founders treat as an afterthought and the one investors look at carefully because it reveals how the founder thinks about the next 18 to 24 months.
The components of a strong ask sl...