Cap table basics
What is Preferred Stock?
The share class issued to investors - gets paid first at exit (liquidation preference), often with anti-dilution and other protective rights.
Preferred stock is the share class venture investors typically receive. It carries a liquidation preference (typically 1× their investment back before common holders are paid anything), protective provisions (voting controls on major decisions), anti-dilution protection (price adjustments on down rounds), and sometimes participation rights (taking both pref AND pro-rata). Preferred holders convert to common at IPO or by election when conversion produces a better exit outcome.