Founders Shares
Founders shares are the equity granted to company founders, usually subject to vesting restrictions even though founders started the company. They often come with special voting rights and control provisions.
Founders shares are common stock issued to the people who start a company, usually at or right after incorporation, at a very low price per share. Because the company’s initial valuation is close to zero, founders buy in at a negligible cost basis and take on the highest risk in exchange for potentially outsized returns if the company succeeds.
How Founders Shares Work
- Structure: Typically issued as common stock, not options.
- Timing: Granted at inception or shortly after incorporation.
- Price: Often fractions of a cent per share, reflecting the near-zero initial valuation.
- Risk/Reward: If the company fails, the shares are worthless; if it succeeds, the return on the tiny initial investment can be enormous.
Last updated: May 23, 2026