Interest rate is something that gets regularly paid out on an investment. Liquidation preference is something that typically pays out once when an illiquid inv

Interest rate is something that gets regularly paid out on an investment. Liquidation preference is something that typically pays out once when an illiquid investment (private company stock) becomes liquid (IPO or sells). They both share aspects in that you are investing money up front but they have different rules to how you get a return on that investment.