Preferred Return 

A Preferred Return is a guaranteed minimum rate of return promised to certain classes of investors, often preferred shareholders or limited partners in private equity or venture capital funds, before any distributions are made to other stakeholders. 

Also called a hurdle rate, it ensures that investors receive a defined return (e.g., 8% annually) on their investment before fund managers or other equity holders participate in profit sharing. This structure aligns incentives and protects investors in high-risk ventures.