“Class F” stock is a special class of common stock that was designed by The Founder Institute.
The “F” is for “Founders” – but it really doesn’t matter what you call it: Class H, Class Q or Class X. The key point is that a separate class of common stock is issued to the founders upon incorporation with the following special rights:
Super-voting rights (10 votes per share);
Certain protective rights similar to those that preferred stockholders are generally granted (e.g., the consent of a majority of the Class F holders is required for the company to enter into a “Liquidation Event”); and
The right to elect a director that has two votes on the Board (not one).
The advantage of issuing Class F Stock is that it arguably levels the playing field for founders in connection with their negotiations with investors. When investors present their term sheets, founders will own not only typical shares of common stock (“Class A”), but also shares of Class F stock, which gives the founders additional negotiating leverage.