What burningout said (broadly); also here are some posts I found helpful about the topic: http://www.avc.com/a_vc/2010/05/an-evolved-view-of-the-participating-

What burningout said (broadly); also here are some posts I found helpful about the topic: http://www.avc.com/a_vc/2010/05/an-evolved-view-of-the-participating-preferred.html http://www.avc.com/a_vc/2010/05/an-evolved-view-of-the-parti... http://www.gabrielweinberg.com/blog/2010/05/liquidation-preference-my-case-for-2x-non-participating.html http://www.gabrielweinberg.com/blog/2010/05/liquidation-pref... http://www.feld.com/wp/archives/2004/08/to-participate-or-not-participating-preferences.html http://www.feld.com/wp/archives/2004/08/to-participate-or-no...