Preferred Stock

Preferred stock is a class of stock that carries rights common stock doesn't, typically issued to investors in a venture funding round. Each round is usually labeled as a new series (Series A, Series B, etc.) with its own negotiated terms. The most important of these rights is usually a Liquidation Preference, which puts preferred stockholders ahead of common stockholders when the company is sold or wound down. Preferred stock is typically convertible into Common Stock, and it generally converts automatically when the company goes public.