We all have heard that "just getting 51% of the company will help us control the board and rule the world!"

But in startup companies, that's often not the case.

A lot of our control actually lies within the agreements that we create within the company, regardless of our percentage of control.

The Difference between Common and Preferred Shares

Startups can have many classes of stock, but the two most often created are "Common" and "Preferred" shares. There are many variants, but the most classic usage is "Preferred" have controlling rights, "Common" does not.

Investors will almost always take Preferred shares, which entitle them to specific types of rights within the company, even if they do not have the majority of those shares.

Those c...