Knowing how the different types of startup equity work is important to make informed decisions about equity ownership, employee motivations, and investor relations.
Key topics covered:
- Different types of startup equity instruments (SAFE notes, convertible notes, warrants, common stock, preferred stock)
- Equity incentives for team members (stock options, Restricted Stock Units, Restricted Stock Awards)
- The importance of understanding these instruments before issuing them
- How accelerator programs typically use SAFE notes for ownership interest
- The long-term implications when these instruments convert to stock ownership
- The importance of working with qualified advisors (accountants and attorneys)
Understanding these equity instruments from day one of your startup journey is essential for making informed decisions about ownership distribution and ensuring your company's financial structure supports long-term growth.
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