The clause that guarantees investors get their money back (sometimes a multiple of it) before founders or employees see a dollar from an acquisition.
The Silicon Valley standard since the 2010s. An investor puts in $10M; on exit, they get either their $10M back OR their pro-rata share of the proceeds, whichever is greater — but not both. Almost always 'non-participating,' which is the founder-friendly half. The 'preferred' part still matters: in a low-multiple exit, common shareholders can walk away with nothing while investors recover their capital.