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Explaining Equity and Executive Compensation with Goodwin Procter

The Skip Podcast

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How to Sell Preferred Stock to Investors in Venture Backed Startups

In a perfect world, the common and preferred stock would be equal in value. But early on, because of the lack of those rights preferences and privileges, the company has the ability to set a lower value on that common stock. In early stage startups, you might have kind of an 80 or even 85% discount to that preferred stock price on the common. And then that differential will close as the company becomes more mature, gets closer to a potential exit.

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