Notion Capital have published an article along with Osbourne Clarke that sets out to de-mystify the most important clauses of a VC investment.
It's well worth a read because start-ups are frequently mesmerised by the valuation of an investment when actually that really isn't the important bit. It's not that valuation doesn't matter but in my experience, the bit to worry about is what happens when things go wrong. That's the bit that'll give you sleepless nights when things (inevitably) don't go as expected 18 months later.
From the founders and other shareholders’ perspective, it is preferable if the investors’ shares are “non-participating”. The investors will be entitled to convert their shares into ordinary shares at any time, usually on a one for one basis. As such, “non-participating” investor shares give the investor down-side protection if the value of the company on an exit is less than the value at the time when they invested as they will still be entitled to get their money back. If the value of the company increased, however, the investor would exercise its conversion rights to convert the shares into ordinary shares and then participate in the growth in value pro rata alongside the ordinary shares. (This concept is sometimes implemented without the need for a conversion right).