Modern Counsel for Growing Companies
In plain English
An equity financing in which the parties establish a share price or valuation framework for issuing stock. It often involves preferred stock and can trigger conversion of outstanding SAFEs or other convertible securities. The ownership result depends on both new investment and the treatment of existing instruments and the option pool.
Types and key distinctions
Preferred Stock
Stock carrying rights or preferences different from common stock, as established in the governing documents. Those rights may address liquidation proceeds, dividends, conversion, voting, or protective approvals. Preferred does not mean every investor is guaranteed repayment or that every class carries the same protections.