Participating Preferred
定義
Participating preferred stock takes its liquidation preference first and then also shares pro rata in the remaining proceeds, the so-called double dip.
資金調達における位置づけ
Considered off-market for early-stage US deals; standard terms are non-participating, where investors choose preference or conversion.
よくある質問
How does participation change founder outcomes?
In a $50M exit with $10M raised on participating terms, investors take $10M plus their percentage of the remaining $40M, cutting the common holders’ share meaningfully.
What is a participation cap?
A limit (like 3x total return) after which participation stops; a partial fix founders negotiate when they cannot remove participation entirely.