Shares
Share Classes for European Startups
Startups issue different classes of shares to founders, employees and investors, each carrying different rights. Understanding these differences matters when negotiating a job offer, a funding round or an exit.
Share classes founders grant to employees
Employee Shares
Employee shares are real shares granted or sold to staff, rather than a right to buy shares later. They give immediate ownership but usually come with vesting and restrictions on transfer.
Common Shares
Common shares, also called ordinary shares outside the US, are the basic share class typically held by founders and employees. They carry standard voting and economic rights but rank behind preferred shares on a sale.
Ordinary Shares
Ordinary shares are the standard share class in UK and European company law, held mainly by founders and employees. Their exact rights are set out in the company's articles and can vary between countries and even between companies.
Preferred Shares
Preferred shares are issued to investors and carry rights that ordinary shares do not, most importantly a liquidation preference that pays out before ordinary shareholders on a sale.
Growth Shares
Growth shares are a separate share class that only gains value once the company's worth rises above a set hurdle. They let senior hires share in future growth without diluting existing shareholders' current value.
Restricted Shares
Restricted shares are real shares granted subject to conditions, most commonly a vesting schedule that lets the company reclaim unvested shares if the holder leaves early.
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