Cap Table & Equity
Participating Preferred
Participating preferred stock takes its liquidation preference and then also shares pro rata in the remaining proceeds — the 'double dip.' In a $50M sale, a $5M participating investor with 20% takes $5M off the top plus 20% of the remaining $45M. It is off-market in standard venture rounds and typically appears as structure in down markets, sometimes softened by a cap on total participation.