Redeemable Preferred Stock

Redeemable preferred stock, also known as exploding preferred, is redeemable its cost plus accrued dividends, at the holder's option after (typically) five years, which in turn gives the holders (potentially converting to creditors) leverage to induce the company to arrange a liquidity event. The threat of creditor status can move the founders off the dime if a liquidity event is not occurring with sufficient rapidity.