Raise Millions by Hustle Fund VC Page 34 Founders get common shares while investors earn preferred shares. There are three main differences. ● Voting power: Common shareholders get to vote on important company decisions whereas preferred shareholders usually don’t have voting rights. ● Dividends: Preferred shareholders get preference on liquidity when the company IPOs/exits. This means they get paid out before the common shareholders. ● Risk: Common shares are a bit riskier. If the company has to close down, founders will be the last to get any money back from what's left, whereas preferred shareholders may recoup some of their money. Founders and employees earn shares by working for the startup, but their shares typically vest across four years. This means they don’t get all the shares upfront when they start working at the company. A typical vesting schedule is as follows: ● The employee earns 25% of their allocated equity after working for the company for 1 year ● Over the next 3 years, they earn the remaining 75% of their equity on a monthly basis. hustlefund.vc / @hustlefundvc