Institutional investors will prefer a ______________________ because it provides the different classes of stock needed to create the preferred shares that VC's want in order to have preferential rights and preferences over other equity holders.

Question

Quizplus · Accepted Answer

A C Corporation is the best choice because it allows for different classes of stock to be created, which is important for VC's to have preferential rights and preferences over other equity holders. S Corporations and LLCs do not have the flexibility to issue different classes of stock. Sole proprietorships cannot issue stock at all as they are not legal entities separate from their owners.

Institutional Investors Will Prefer a ______________________ Because It Provides the Different