The sponsor who sourced the deal and performed the initial due diligence is sometimes rewarded with a liquidation preference and a preferred return. This guarantees that, upon the sale of the company, the sponsor will receive their initial investment back before other co-investors receive any proceeds. The sponsor will also receive a guaranteed return (usually around 8% IRR) before other co-investors receive any proceeds. This protects the sponsor from downside risk since they receive the proceeds first.
After the sponsor receives their initial investment back and gets a guaranteed return, the other co-investors will also receive their initial investment back and get proceeds such that they also receive the same return that the sponsor received. Then the remaining proceeds are split up based on their ownership %, diluted for any exercise of options.