Common vs. Preferred Stock
This is a short follow up on my last note, my keynote from The BootStrapper Venture Summit.
There are a number of differences between Common and Preferred Stock. The primary difference I would say is that preferred stock is far more protected than common stock from such things dilution. I’ve seen a lot of comparative numbers but Preferred Stock can be worth anywhere from at least as much as Common Stock to 5x as much as common stock. Also, when a company sells, preferred gets paid before common stock.
So what’s the point of this post? If you’re an entrepreneur, be conscious of what you’re giving away and if you’re a newbie investor, be conscious of what you’re getting.
Some other clauses to consider, Liquidity Preference & Participating Preferred but i suggest reading up on the specific differences at a great site - Venture Hacks
. Nivi can explain it a lot better than I can.
Email This
