[danshapiro]

The term for first-money-out is "preference". Preference terms are almost ubiquitous in preferred stock (the similarity in names isn't entirely coincidental).

Participation means that after the investors get their preference out, they continue to share in proceeds ratably. It is also common, but less so.

The short version is: preference WITH participation means "Your money back plus your share". Preference WITHOUT participation means "Your money back OR your share, whichever is bigger".

Brad Feld's term sheet series explains this well, in depth.