VC investors typically negotiate for “Preferred Stock,” a type of company shares that have special rights and privileges. Some of these benefits are included below:

• Liquidation Preferences: Preferred shareholders often are paid before common shareholders in the event of a liquidation event, such as a sale or IPO. You can read more about this here.
• Anti-Dilution Protection: Preferred shareholders are protected against dilution caused by future fundraising rounds or down rounds.
• Protective Provisions: Preferred shareholders can negotiate for provisions that allow them to veto certain corporate actions.
• General voting rights and board representation: Preferred shareholders can have similar voting rights as common shareholders and the ability to elect board members.

Not all preferred shares are the same, as different financing rounds may have different classes of preferred shares with varying rights and privileges.