Preferred Stock
A class of equity ownership that carries preferential rights over common stock, typically including liquidation preference, anti-dilution protection, dividend priority, and special voting rights. In venture capital financing, investors almost always receive preferred stock, which provides downside protection while maintaining upside potential through conversion to common stock. The specific rights attached to preferred stock are negotiated in each funding round and documented in the company's certificate of incorporation.
Related Terms
The basic class of equity ownership in a corporation that typically carries voting rights and a residual claim on the co...
A term in preferred stock agreements that determines the order and amount of payouts to investors when a company is sold...
A protective provision in investment agreements that shields early investors from losing ownership percentage when a com...
The legal entitlements that shareholders have to vote on corporate matters, including the election of directors, approva...
Short for 'capitalization table,' a detailed spreadsheet or document that records the equity ownership structure of a co...
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