SeedBlink Blog

But not all shares are created equal. Whether you're seeking high returns or prioritizing stability, understanding the types of shares available is key to making smarter investment decisions. Here's a guide to help you navigate which shares are best for your strategy.

1. Preferred shares: stability with seniority

Preferred shares often top the list for secondary investors because they usually come with added protections:

• Liquidation Preferences: Priority payouts during liquidation events.
• Anti-Dilution Rights: Safeguard against share value erosion in future rounds.
• Dividends: Fixed income before common shareholders receive any distributions.

Preferred shares are ideal for investors who prioritize reduced risk and predictable returns. However, their relative safety often comes at a premium, meaning higher purchase prices on the secondary market.

Best For: Conservative investors looking for protection against downside risks.

Considerations: Premium pricing may reduce overall returns compared to common shares.

2. Common shares: high risk, high reward

Unlike preferred shares, common shares don’t come with special rights. They’re the last in line for payouts during liquidation but offer significant upside if the company performs well.

Common shares are typically more affordable than preferred shares, making them attractive to investors willing to accept higher risk in exchange for the potential of outsized gains.

Best For: Risk-tolerant investors seeking long-term growth.

Considerations: No preferential rights, increasing risk in case of downturns or liquidation.

3. Convertible securities: hybrid potential

Convertible notes or SAFEs are hybrid instruments that turn into equity during a future financing round or liquidity event. These instruments offer flexibility and often allow investors to participate in valuation growth.

Best for: Investors looking to combine debt-like safety with equity-like upside.

Considerations: Conversion terms may dilute potential returns.

4. Consider the stage and sector

Shares in late-stage startups generally carry lower risk, offering a clearer path to exit events such as IPOs or acquisitions. By contrast, early-stage shares might provide larger discounts but come with significantly higher uncertainty.

Investors should also consider sector-specific dynamics. For example:

• Fintech and SaaS: Offer relatively stable returns in mature markets.
• Climate Tech and Health Tech: High-growth potential but often subject to regulatory risks.

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The best shares for you depend on your investment goals. Preferred shares provide stability and diversification, while common shares offer higher risk and potential reward. Convertible securities strike a balance, offering flexibility for investors willing to navigate more complex terms.

At SeedBlink, our secondary platform empowers you with detailed insights and access to Europe’s most promising late-stage startups. Whether you’re building a diversified portfolio or seeking specific growth opportunities, we provide the tools and transparency to make informed decisions.

Ready to explore secondary opportunities? Visit SeedBlink’s Secondaries platform to learn more.

Explore secondary investment opportunities with SeedBlink.