Each new round of investment in a startup adds another layer to a preference “stack” that resembles a cake. This stack represents the order in which investors will be paid out in an exit if the company is sold for less than the post-money each of them paid. The Common Stock (Founders and Employees) is the bottom layer of the stack. The next layer is the Seed preferred, the next layer is the Series A preferred, then Series B, etc. If an investor purchases Common Stock, they will be in the bottom layer of the stack, alongside the employees and the Series A Preferred will sit above the Common.