Category Archives: Financings

Angel Financing – Issue Common or Preferred Stock?

Founders contemplating an angel financing often ask whether their company should issue common or preferred stock to angel investors. A fundamental difference between the two is that preferred stock has a liquidation preference, which upon a liquidation or sale of the … Continue reading

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What Rights Come With Preferred Stock?

Venture capitalists and sophisticated angels typically insist on receiving preferred stock for their investments in emerging companies. As a result, companies pursuing such investments often ask “what rights come with preferred stock?” First, it is important to recognize that all preferred stock … Continue reading

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Participating vs. Non-Participating Preferred Stock

Q: What is participating preferred stock? What distinguishes it from non-participating preferred stock? Who prefers participating preferred stock, and who prefers non-participating preferred stock? A: Participating preferred stock is preferred stock that entitles the holder to a specified preferential payment … Continue reading

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