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The Facebook Deal: Equity Lowdown

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The Facebook Deal: Equity Lowdown

Preference Nitty and Gritty

Mark continued, "We shook hands with Peter, but then noticed something odd in the contract. His $500,000 bought a different class of stock than what they owned. Peter's was "preferred" and ours was just "common." We felt gently insulted, and asked about it. This flavor of preferred stock didn't pay a dividend and had no fancy terms. In many venture deals, preferred stock at this stage would carry other terms usually favorable to the investor, the most common of...

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