Structured equity describes financings that sit between straight equity and debt, using features such as senior liquidation preferences, guaranteed minimum multiples, ratchets, or redemption to protect the investor’s downside while preserving upside participation. It is common in late-stage rounds and difficult markets.
For founders, structured equity can avoid a headline down-round by keeping the nominal valuation high, but the embedded protections can be expensive and dilutive at exit. Understanding the true cost behind the optical valuation is essential before accepting these terms.