Liquidation preference and participation rights are common features of term sheets involving the use of preferred stock in venture financing. Both these features are typically found in venture financing term sheets and enhance the position of the venture investor compared to company founders....

Entrepreneurs who deal with a venture capital firm (VC) for the first time often find themselves unprepared for the experience. The financing terms (deal structure), which specify the percentage of the firm's common stock that goes to the VC often require that the entrepreneur forfeit a large...