Founders are issued common stock but investors get preferred stock, and have priority recovering the investment when the business is sold. VC investor Fred Wilson believes that entrepreneurs can get a shot at a fair deal if they understand where investors are coming from. He discusses preferred stocks and investors' need for a liquidation preference, and gives us a model for liquidation analysis; seeFW1,FW2,FW3, andFW4.

FW1: https://avc.com/2011/07/financing-options-preferred-stock/

FW2: http://avc.com/2010/08/heres-why-you-need-a-liquidation-preference/

FW3: http://avc.com/2011/10/liquidation-analysis/

FW4: http://avc.com/2011/10/liquidation-analysis-continued/