Investors tend to see dividends paid from mature companies rather than startup companies. Startups reinvest all excess cash from operations and future investments, to grow the underlying business and invest in expanding the company. Dividends tend to come from mature companies who are profitable and successfully generating enough cash to be able to invest, maintain its operations, as well as returning cash to shareholders in the form of dividends. However, some startups may have issued preferred shares or pref shares, which may mean some kind of pref dividend to be paid out.

If a company were to issue a dividend, it would be to return cash to its shareholders. It may be a special or one-off dividend, or if the company's confident that it can return cash to shareholders on a regular basis, it may become an annual dividend. Annual dividends will typically be from five to 15% of the company's profits and maybe cumulative or non cumulative.

A cumulative dividend is a dividend that accrues regardless of what the startup company does. Even if it makes a loss, the dividend gradually accumulates and will one day need paying to the investor. But more on this in a second. A non cumulative dividend is only payable if the startup company decides to declare the dividend.

Non cumulative dividends tends to be more favorable to startup companies than cumulative dividends. Even with cumulative dividends, VC funds typically do not anticipate actual cash payments to be made to them. Instead, cumulative dividends are viewed as a sweetener to the underlying equity investment. Is it like an add-on upon conversion of the preferred shares into common shares, maybe IPO, the cumulative dividends convert into additional common shares, which increases the VC funds percentage ownership. In startup company post IPO cumulative dividends are also typically paid upon payment of the liquidation preference and any redemption events.