Glossary · Ownership
Participating preferred
Preferred shares that first take their liquidation preference, then also share in leftover proceeds like common — “double dipping.” Less founder-friendly than non-participating preferred.
Related: Liquidation preference · Preferred stock
A bit more nuance▾
- Many founder-friendly deals avoid participation.
- If you see it, model the exit waterfall carefully.
Go deeper▾
Discussion questions▾
- What is the story if an investor insists on participation?
- How would a lawyer explain this to a new employee?
Educational reference only — not legal, tax, or investment advice. Terms vary by country and deal; ask a qualified professional when it matters.