The liquidation is pro-rata for the common shareholders. So once Preferred gets paid, the common splits the remaining pro-rata. With the actual docs (Sharehold

The liquidation is pro-rata for the common shareholders. So once Preferred gets paid, the common splits the remaining pro-rata. With the actual docs (Shareholders rights agreement that goes with the purchase, it would be clear). 8% of the amount invested. This is a standard term to allow investors to get paid if the company is in business a long time is cash flow positive, but not likely to have a liquidation event. VC funds typically have a 10 year life and need are way to return money to their LPs.