For the term, the Participating preferred stockholders are entitled to receive a share of any remaining liquidation proceeds on an as-converted to common stock basis after they have already gotten back their liquidation preference. In contrast, non-participating preferred stockholders either get (i) their liquidation preference back or (ii) the amount they would have gotten had they converted to common stock. In other words, participating preferred gets the original capital back and the share of ownership. This term is sometimes referred to as investors double dipping as investors are getting the capital and the ownership versus just the percentage of the capital.
For the term, the Participating preferred stockholders are entitled to receive a share of any remaining liquidation proceeds on an as-converted to common stock basis after they have already gotten back their liquidation preference. In contrast, non-participating preferred stockholders either get (i) their liquidation preference back or (ii) the amount they would have gotten had they converted to common stock. In other words, participating preferred gets the original capital back and the share of ownership. This term is sometimes referred to as investors double dipping as investors are getting the capital and the ownership versus just the percentage of the capital.
