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General

Equity

Also known as shares, ownership, shareholding

Ownership in a company, held as shares. If you own 10% of the equity, you own 10% of whatever the company is eventually worth.

Example

Two co-founders splitting equity 60/40 have agreed who owns what before any money arrives.

Related terms

A list of everyone who owns a piece of the company — founders, investors, employees with options — and how much each holds.

When new shares are issued (to investors or employees), each existing owner's percentage of the company shrinks — even though the company is usually worth more overall.

A pool of shares set aside to give employees ownership in the company, usually earned over time. A key way startups attract talent without huge salaries.

Earning your shares or options gradually over time, so you have to stay to fully own them. A "cliff" means you earn nothing until a first milestone (often one year).

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