Startup Glossary

ALL

equity

A corporation is divided into shares, which represent a slice of both the company itself and the value the company creates. These shares, once distributed, represent the company ownership (a word commonly interchanged with equity).

FURTHER READING
Startup Equity 101

equity seed round

When an entrepreneur first sells a part of his or her business— and therefore a proportional part of the good things (like profits) and the not-so-good things (like losses)—to an investor. Equity investments, unlike loans, do not need to be paid back.

founders stock (or founder’s equity)

The common stock owned by one or more of a company’s founders, typically received when the company was incorporated.

FURTHER READING
Co-founder Equity Split

sweat equity

The equity or ownership interest created in a startup by its founders as a result of their contributions in the form of hard work and toil.

FURTHER READING
Why Sweat Equity Often Stinks