Why do Angel Investors and VC Funds demand preference shares from a startup in return for their investment?
Because they seek a preference on receiving money before it is distributed to any other smaller investor or the Founders themselves at an exit event. This exit can be in the form of acquisition of the startup by a bigger fish, sale of intangible or tangible assets of the business or any liquidation event when the business is decided to either be passed on to someone or be wound up, and money is realised / received / collected for distribution among the shareholders.
