What is Preferred Equity?

Outside investors typically request/demand conditions such as:

• Liquidity preference: in an exit, we get paid back our investment (or some multiple of it) before common shareholders get any payout
• Board seat or observer rights: we get a representative on the board of directors, or at least the right to attend all board meetings
• Information rights: we get regular financial updates
• Participation rights: we get the right to buy shares in future rounds.