Liquidation preference
Also: Liq pref
The rule that decides who gets paid first, and how much, when the company is sold.
A '1x non-participating' pref is the founder-friendly norm; participating or multiple prefs can quietly gut founder returns.
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Get the real-world version of "Liquidation preference" drawn from hundreds of conversations with founders and investors.
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Participating preferred
A preference where the investor gets their money back AND shares in the rest — 'double dipping'.
Preferred shares
The share class investors usually take, with extra rights over ordinary shares — preferences, votes, protections.
Term sheet
A short, mostly non-binding document setting out the key terms of an investment before the long-form legals.
Common shares
The plain shares founders and employees hold, last in line behind preferred in a payout.
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