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class="elementor-grid-item"> <a class="elementor-icon elementor-social-icon elementor-social-icon-twitter elementor-repeater-item-451a360" href="https://twitter.com/pillar_vc" target="_blank"> <span class="elementor-screen-only">Twitter</span> <i class="fab fa-twitter"></i> </a> </span> <span class="elementor-grid-item"> <a class="elementor-icon elementor-social-icon elementor-social-icon-linkedin elementor-repeater-item-e8bb63b" href="https://www.linkedin.com/company/pillar-vc" target="_blank"> <span class="elementor-screen-only">Linkedin</span> <i class="fab fa-linkedin"></i> </a> </span> </div> </div> </div> </div> </div> </div> </section> </div> <main id="content" class="site-main post-899 page type-page status-publish hentry"> <div class="page-content"> <div data-elementor-type="wp-page" data-elementor-id="899" class="elementor elementor-899" data-elementor-post-type="page"> <section class="elementor-section elementor-top-section elementor-element elementor-element-a3ea3cd elementor-section-full_width elementor-section-height-min-height elementor-section-height-default elementor-section-items-middle" data-id="a3ea3cd" data-element_type="section"> <div class="elementor-container elementor-column-gap-default"> <div class="elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-d130a89" data-id="d130a89" data-element_type="column"> <div class="elementor-widget-wrap elementor-element-populated"> <div class="elementor-element elementor-element-5edc565 animated-slow elementor-invisible elementor-widget elementor-widget-heading" data-id="5edc565" data-element_type="widget" data-settings="{"_animation":"fadeIn"}" data-widget_type="heading.default"> <div class="elementor-widget-container"> <span class="elementor-heading-title elementor-size-default">our philosophy</span> </div> </div> <div class="elementor-element elementor-element-7275e7f animated-fast elementor-invisible elementor-widget elementor-widget-heading" data-id="7275e7f" data-element_type="widget" data-settings="{"_animation":"fadeInUp","_animation_delay":500}" data-widget_type="heading.default"> <div class="elementor-widget-container"> <h1 class="elementor-heading-title elementor-size-default">Common Stock</h1> </div> </div> <div class="elementor-element elementor-element-06fa445 elementor-hidden-mobile elementor-widget elementor-widget-spacer" data-id="06fa445" data-element_type="widget" data-widget_type="spacer.default"> <div class="elementor-widget-container"> <div class="elementor-spacer"> <div class="elementor-spacer-inner"></div> </div> </div> </div> <div class="elementor-element elementor-element-4fead67 animated-fast elementor-invisible elementor-widget elementor-widget-breadcrumbs" data-id="4fead67" data-element_type="widget" data-settings="{"_animation":"fadeIn","_animation_delay":1000}" data-widget_type="breadcrumbs.default"> <div class="elementor-widget-container"> <p id="breadcrumbs"><span><span><a href="https://www.pillar.vc/">Home</a></span> / <span><a href="https://www.pillar.vc/belief/">Philosophy</a></span> / <span class="breadcrumb_last" aria-current="page">Common Stock</span></span></p> </div> </div> </div> </div> </div> </section> <section class="elementor-section elementor-top-section elementor-element elementor-element-dfb5b07 elementor-section-full_width elementor-section-height-default elementor-section-height-default" data-id="dfb5b07" data-element_type="section" data-settings="{"background_background":"classic"}"> <div class="elementor-container elementor-column-gap-default"> <div class="elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-17d86b7" data-id="17d86b7" data-element_type="column"> <div class="elementor-widget-wrap elementor-element-populated"> <div class="elementor-element elementor-element-e17df7d animated-fast elementor-invisible elementor-widget elementor-widget-heading" data-id="e17df7d" data-element_type="widget" data-settings="{"_animation":"fadeInUp","_animation_delay":200}" data-widget_type="heading.default"> <div class="elementor-widget-container"> <h3 class="elementor-heading-title elementor-size-default">the common stock model</h3> </div> </div> <div class="elementor-element elementor-element-db0c98c animated-fast elementor-invisible elementor-widget elementor-widget-heading" data-id="db0c98c" data-element_type="widget" data-settings="{"_animation":"fadeInUp","_animation_delay":200}" data-widget_type="heading.default"> <div class="elementor-widget-container"> <h3 class="elementor-heading-title elementor-size-default">When we founded Pillar VC in 2016, we decided to <a href="https://medium.com/pillar-companies/there-has-to-be-a-better-way-d356400f2527">offer to buy Common Stock in the companies we back</a>—the very same type of stock Founders would own. </h3> </div> </div> <div class="elementor-element elementor-element-d8967eb animated-fast elementor-invisible elementor-widget elementor-widget-text-editor" data-id="d8967eb" data-element_type="widget" data-settings="{"_animation":"fadeInUp","_animation_delay":400}" data-widget_type="text-editor.default"> <div class="elementor-widget-container"> <p>Why? We’ve observed that when founders and investors own different types of stock, this structure can do odd and unpredictable things in misaligning interests.</p><p>Investing will always be about finding exceptional people attacking or creating big markets with a disruptive idea. When we find one, we can invest on terms that align investor, founder and employee interests and focus on upside enhancement, not downside protection.</p> </div> </div> <div class="elementor-element elementor-element-d84b9e4 elementor-widget-divider--view-line elementor-widget elementor-widget-divider" data-id="d84b9e4" data-element_type="widget" data-widget_type="divider.default"> <div class="elementor-widget-container"> <div class="elementor-divider"> <span class="elementor-divider-separator"> </span> </div> </div> </div> <section class="elementor-section elementor-inner-section elementor-element elementor-element-b600386 elementor-section-full_width elementor-section-height-default elementor-section-height-default" data-id="b600386" data-element_type="section"> <div class="elementor-container elementor-column-gap-default"> <div class="elementor-column elementor-col-33 elementor-inner-column elementor-element elementor-element-47ec00e" data-id="47ec00e" data-element_type="column"> <div class="elementor-widget-wrap elementor-element-populated"> <div class="elementor-element elementor-element-af4eb4d elementor-widget elementor-widget-pillar-news-item" data-id="af4eb4d" data-element_type="widget" data-widget_type="pillar-news-item.default"> <div class="elementor-widget-container"> <div class="guide"> <div class="fp-guide dark"> <div class="bread"> <a href="https://www.pillar.vc/news/">News</a> / <a href="https://www.pillar.vc/category/common-stock/">Common Stock</a> </div> <a href="https://www.pillar.vc/common-stock/lessons-learned-after-5-years-of-buying-common-stock-in-startups/"> <h2>Lessons learned after 5 years of buying common stock in startups</h2> </a> <a href="https://www.pillar.vc/team/jamie-goldstein/" class="person-circle"> <img decoding="async" src="https://www.pillar.vc/wp-content/uploads/2021/11/jamie-goldstein-2-588x800.jpg" alt="Jamie Goldstein" /> <span>Jamie Goldstein</span> </a> </div> </div> </div> </div> </div> </div> <div class="elementor-column elementor-col-33 elementor-inner-column elementor-element elementor-element-d9bbd1b" data-id="d9bbd1b" data-element_type="column"> <div class="elementor-widget-wrap elementor-element-populated"> <div class="elementor-element elementor-element-49bc6d5 elementor-hidden-mobile elementor-widget elementor-widget-pillar-news-item" data-id="49bc6d5" data-element_type="widget" data-widget_type="pillar-news-item.default"> <div class="elementor-widget-container"> <div class="guide"> <div class="fp-guide dark"> <div class="bread"> <a href="https://www.pillar.vc/news/">News</a> / <a href="https://www.pillar.vc/category/common-stock/">Common Stock</a> </div> <a href="https://www.pillar.vc/common-stock/the-common-stock-movement-an-update/"> <h2>The Common Stock Movement — an update</h2> </a> <a href="https://www.pillar.vc/team/jamie-goldstein/" class="person-circle"> <img decoding="async" src="https://www.pillar.vc/wp-content/uploads/2021/11/jamie-goldstein-2-588x800.jpg" alt="Jamie Goldstein" /> <span>Jamie Goldstein</span> </a> </div> </div> </div> </div> </div> </div> <div class="elementor-column elementor-col-33 elementor-inner-column elementor-element elementor-element-e5dcb02" data-id="e5dcb02" data-element_type="column"> <div class="elementor-widget-wrap elementor-element-populated"> <div class="elementor-element elementor-element-e59e59b elementor-widget elementor-widget-pillar-news-item" data-id="e59e59b" data-element_type="widget" data-widget_type="pillar-news-item.default"> <div class="elementor-widget-container"> <div class="guide"> <div class="fp-guide dark"> <div class="bread"> <a href="https://www.pillar.vc/news/">News</a> / <a href="https://www.pillar.vc/category/common-stock/">Common Stock</a> </div> <a href="https://www.pillar.vc/common-stock/there-has-to-be-a-better-way/"> <h2>There has to be a better way</h2> </a> <a href="https://www.pillar.vc/team/jamie-goldstein/" class="person-circle"> <img decoding="async" src="https://www.pillar.vc/wp-content/uploads/2021/11/jamie-goldstein-2-588x800.jpg" alt="Jamie Goldstein" /> <span>Jamie Goldstein</span> </a> </div> </div> </div> </div> </div> </div> </div> </section> <div class="elementor-element elementor-element-6e13d3c elementor-widget-divider--view-line elementor-widget elementor-widget-divider" data-id="6e13d3c" data-element_type="widget" data-widget_type="divider.default"> <div class="elementor-widget-container"> <div class="elementor-divider"> <span class="elementor-divider-separator"> </span> </div> </div> </div> </div> </div> </div> </section> <section class="elementor-section elementor-top-section elementor-element elementor-element-6f5cff4 elementor-section-full_width elementor-section-content-top elementor-section-height-default elementor-section-height-default" data-id="6f5cff4" data-element_type="section" data-settings="{"background_background":"classic"}"> <div class="elementor-container elementor-column-gap-custom"> <div class="elementor-column elementor-col-33 elementor-top-column elementor-element elementor-element-c645250" data-id="c645250" data-element_type="column"> <div class="elementor-widget-wrap elementor-element-populated"> <div class="elementor-element elementor-element-36fff2c animated-fast elementor-invisible elementor-widget elementor-widget-heading" data-id="36fff2c" data-element_type="widget" data-settings="{"_animation":"fadeInUp","_animation_delay":600}" data-widget_type="heading.default"> <div class="elementor-widget-container"> <h2 class="elementor-heading-title elementor-size-default">Common Stock Model FAQs</h2> </div> </div> </div> </div> <div class="elementor-column elementor-col-66 elementor-top-column elementor-element elementor-element-05d63b8" data-id="05d63b8" data-element_type="column"> <div class="elementor-widget-wrap elementor-element-populated"> <div class="elementor-element elementor-element-fb54025 animated-slow elementor-invisible elementor-widget elementor-widget-accordion" data-id="fb54025" data-element_type="widget" data-settings="{"_animation":"fadeIn","_animation_delay":400}" data-widget_type="accordion.default"> <div class="elementor-widget-container"> <div class="elementor-accordion"> <div class="elementor-accordion-item"> <h2 id="elementor-tab-title-2631" class="elementor-tab-title" data-tab="1" role="button" aria-controls="elementor-tab-content-2631" aria-expanded="false"> <a class="elementor-accordion-title" tabindex="0">What are the key differences between Common Stock and Preferred Stock?</a> </h2> <div id="elementor-tab-content-2631" class="elementor-tab-content elementor-clearfix" data-tab="1" role="region" aria-labelledby="elementor-tab-title-2631"><p>Common Stock is issued to Founders and Employees. Preferred Stock is a different class of ownership with terms (features) that provide advantages to investors – typically designed to help them in instances where the investment doesn’t work out as planned. Those terms normally include a preference, anti-dilution, dividends, and voting controls. For example, preference gives investors a choice at the time of an exit to either get their money back or convert into the percent of the company they own. Almost universally, investors typically buy Preferred Stock when they invest in a company.</p></div> </div> <div class="elementor-accordion-item"> <h2 id="elementor-tab-title-2632" class="elementor-tab-title" data-tab="2" role="button" aria-controls="elementor-tab-content-2632" aria-expanded="false"> <a class="elementor-accordion-title" tabindex="0">Which type of stock is typically granted to founders and startup executives?</a> </h2> <div id="elementor-tab-content-2632" class="elementor-tab-content elementor-clearfix" data-tab="2" role="region" aria-labelledby="elementor-tab-title-2632"><p>Founders receive Common Stock. Executives and employees receive options that enable them to purchase Common Stock at a later date at a specific price.</p></div> </div> <div class="elementor-accordion-item"> <h2 id="elementor-tab-title-2633" class="elementor-tab-title" data-tab="3" role="button" aria-controls="elementor-tab-content-2633" aria-expanded="false"> <a class="elementor-accordion-title" tabindex="0">What happens to Preferred Stock and Common Stock when a startup raises its Series A round? </a> </h2> <div id="elementor-tab-content-2633" class="elementor-tab-content elementor-clearfix" data-tab="3" role="region" aria-labelledby="elementor-tab-title-2633"><p>Each new round of investment in a startup adds another layer to a preference “stack” that resembles a cake. This stack represents the order in which investors will be paid out in an exit if the company is sold for less than the post-money each of them paid.</p><p>The Common Stock (Founders and Employees) is the bottom layer of the stack. The next layer is the Seed preferred, the next layer is the Series A preferred, then Series B, etc.</p><p>If an investor purchases Common Stock, they will be in the bottom layer of the stack, alongside the employees and the Series A Preferred will sit above the Common.</p></div> </div> <div class="elementor-accordion-item"> <h2 id="elementor-tab-title-2634" class="elementor-tab-title" data-tab="4" role="button" aria-controls="elementor-tab-content-2634" aria-expanded="false"> <a class="elementor-accordion-title" tabindex="0">Will Pillar only buy Common Stock?</a> </h2> <div id="elementor-tab-content-2634" class="elementor-tab-content elementor-clearfix" data-tab="4" role="region" aria-labelledby="elementor-tab-title-2634"><p>While we always offer to buy Common Stock when we lead an investment in a company, we leave the decision up to the founder around whether they prefer to structure the investment around Common Stock or Preferred Stock. This is a personal decision, and we’ve seen founders lean both ways<span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 11pt; white-space: pre-wrap;">––</span>you can read more about the Common Stock movement and the impact we’ve experienced <a style="background-color: #fffaf5;" href="https://medium.com/pillar-companies/the-common-stock-movement-an-update-f1126046fb50"><span style="color: #ff0000;">here</span></a>.</p></div> </div> <script type="application/ld+json">{"@context":"https:\/\/schema.org","@type":"FAQPage","mainEntity":[{"@type":"Question","name":"What are the key differences between Common Stock and Preferred Stock?","acceptedAnswer":{"@type":"Answer","text":"<p>Common Stock is issued to Founders and Employees. Preferred Stock is a different class of ownership with terms (features) that provide advantages to investors – typically designed to help them in instances where the investment doesn\u2019t work out as planned. Those terms normally include a preference, anti-dilution, dividends, and voting controls. For example, preference gives investors a choice at the time of an exit to either get their money back or convert into the percent of the company they own. Almost universally, investors typically buy Preferred Stock when they invest in a company.<\/p>"}},{"@type":"Question","name":"Which type of stock is typically granted to founders and startup executives?","acceptedAnswer":{"@type":"Answer","text":"<p>Founders receive Common Stock. Executives and employees receive options that enable them to purchase Common Stock at a later date at a specific price.<\/p>"}},{"@type":"Question","name":"What happens to Preferred Stock and Common Stock when a startup raises its Series A round?","acceptedAnswer":{"@type":"Answer","text":"<p>Each new round of investment in a startup adds another layer to a preference \u201cstack\u201d that resembles a cake. This stack represents the order in which investors will be paid out in an exit if the company is sold for less than the post-money each of them paid.<\/p><p>The Common Stock (Founders and Employees) is the bottom layer of the stack. The next layer is the Seed preferred, the next layer is the Series A preferred, then Series B, etc.<\/p><p>If an investor purchases Common Stock, they will be in the bottom layer of the stack, alongside the employees and the Series A Preferred will sit above the Common.<\/p>"}},{"@type":"Question","name":"Will Pillar only buy Common Stock?","acceptedAnswer":{"@type":"Answer","text":"<p>While we always offer to buy Common Stock when we lead an investment in a company, we leave the decision up to the founder around whether they prefer to structure the investment around Common Stock or Preferred Stock. This is a personal decision, and we\u2019ve seen founders lean both ways<span style=\"background-color: transparent; color: #000000; font-family: Arial; font-size: 11pt; white-space: pre-wrap;\">\u2013\u2013<\/span>you can read more about the Common Stock movement and the impact we\u2019ve experienced <a style=\"background-color: #fffaf5;\" href=\"https:\/\/medium.com\/pillar-companies\/the-common-stock-movement-an-update-f1126046fb50\"><span style=\"color: #ff0000;\">here<\/span><\/a>.<\/p>"}}]}</script> </div> </div> </div> </div> </div> </div> </section> </div> <div class="post-tags"> </div> </div> </main> <div data-elementor-type="footer" data-elementor-id="2926" class="elementor elementor-2926 elementor-location-footer" data-elementor-post-type="elementor_library"> <section class="elementor-section elementor-top-section elementor-element elementor-element-e4c4531 elementor-section-full_width elementor-section-height-default elementor-section-height-default" data-id="e4c4531" data-element_type="section" data-settings="{"background_background":"classic"}"> <div class="elementor-container elementor-column-gap-default"> <div class="elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-806d3dc" data-id="806d3dc" data-element_type="column"> <div class="elementor-widget-wrap elementor-element-populated"> <div class="elementor-element elementor-element-9f937a6 elementor-widget elementor-widget-news-ticker" data-id="9f937a6" data-element_type="widget" data-widget_type="news-ticker.default"> <div class="elementor-widget-container"> <div class="news-ticker"> <div class="swiper-wrapper"> </div> </div> <script> window.addEventListener('DOMContentLoaded', function () { var swiper = new Swiper(".news-ticker", { spaceBetween: 0, centeredSlides: true, speed: 8000, autoplay: { delay: 1, }, loop: true, slidesPerView:'auto', allowTouchMove: false, pauseOnMouseEnter: true, }); 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