Here is my understanding:

Preferred shares pay a set dividend, say $4 per year. If the company is not in a good cash position, it can forego this payment, but dividends keep accruing. Dividends to common shares cannot be paid until the preferred shares are all paid their dividends. So the preferred shares get the first take of the profits, but this take is limited.

Convertible preferred shares operate similarly, but there is an option to convert to common shares if the company becomes very profitable. Once the CPS is converted, it cannot be converted back (unless bylaws allow this).

In my business days, I did not hear of preferred shares being used to finance smaller companies. I think most investors, if they believe the company will do well, would prefer common shares.

Larger blue chip companies were occasionally issuing preferred shares, which could be sold on the stock exchanges. I have not heard much of his happening these days, but I have been away from that side of business.