Common Stock
The basic share type held by founders and employees, with no special investor protections.
Definition
Common stock is the standard equity held by founders, employees, and some early advisors. It has voting rights but lacks the special protections of preferred stock, such as liquidation preferences and anti-dilution provisions. When you exercise stock options, you receive common stock. In an exit, common stockholders get paid after all preferred stockholders.
Why it matters
As an employee, you almost certainly hold common stock (or options to buy common stock). Because preferred stockholders get paid first in an exit, your common stock is worth less per share than preferred. This is partly why the 409A price is lower than the preferred price.
Example
At a $100M acquisition, investors with $30M in liquidation preferences get paid first. The remaining $70M is split among all shareholders. Common holders (employees) only share in the $70M, not the full $100M.