Participating preferred stock is used in some venture capital financing of start-ups.

Question

Quizplus · Accepted Answer

Participating preferred stock is indeed used in venture capital financing of startups, as it offers investors the right to receive dividends equal to the generally agreed upon amount per share before any dividends are distributed to common shareholders, and also participate in further dividends along with the common shareholders.

Participating Preferred Stock Is Used in Some Venture Capital Financing