The Venture Capital Podcast with Fexingo · 2026-07-26 · 6 min
In 2026, a decade-old term sheet clause is making a comeback: participating preferred stock. Lucas and Luna explore why VCs are increasingly insisting on this investor-friendly provision - which guarantees their investment back plus a share of the upside - as the era of easy money fades. They anchor the discussion in current market conditions: ARK Innovation ETF trading at $71.89, down nearly 60% from its peak, and tech giants like Monday.com blaming AI for layoffs. With a concrete example of a fictional Series B round at a robotics startup, they break down how participating preferred shifts the risk-reward balance, why founders should negotiate for non-participating or capped structures, and what this trend says about VC sentiment heading into the second half of 2026. If you're raising capital or sitting on the other side of the table, this episode is essential listening.
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