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thanks again.. so basically if I negotiate to get preferred stock and if the company gets valued at 100 million, I can cash out 5 million since it would not get

by vs2370 11y ago

thanks again.. so basically if I negotiate to get preferred stock and if the company gets valued at 100 million, I can cash out 5 million since it would not get diluted with subsequent funding rounds..

TuringNYC 11y ago
Be careful with the assumption that you can just "cash out" -- firstly some companies simply will not let you...you are stuck with the equity for 10+ years until an IPO. If you are allowed to sell, selling in the private market is not as easy as eTrade -- you will pay a big commission and you only get what someone is willing to pay. See http://www.ft.com/intl/cms/s/0/27e9444c-0879-11e5-85de-00144feabdc0.html#axzz3jcuUW6A9 http://www.ft.com/intl/cms/s/0/27e9444c-0879-11e5-85de-00144...
rahimnathwani 11y ago
I have never heard of someone being granted preferred stock in a startup, except in return for cold hard cash. Part of the rationale of preferred stock is to protect investors from the CEO just selling the company tomorrow and taking home a large % of the cash in the bank.