4 ms·
This thread has reminded me of a concept (whose term I am struggling and failing to remember) that is as important, if not more, than what is traditionally thou
by eximius 6y ago
This thread has reminded me of a concept (whose term I am struggling and failing to remember) that is as important, if not more, than what is traditionally thought of as the cap table.
In the case of a sale, investors with <this term> would get their money back (possibly at an inflated ratio) before the rest of the money from the sale is distributed via equity.
This is important because it means that even if you get favorable stock terms, you might still be screwed (or at least disadvantaged) if there is no money left after this money is paid out.
Can anyone remind me of the term?
- amsilprotag 6y agoPreferred stock? Priority?
- plasma 6y agoLiquidation preference
- eximius 6y agoAh, yes, I think it was this. The startup I left had unfavorable liquidation preference seniority for employees (standard) but most of the investors had a liquidation multiplier. https://angel.co/blog/liquidation-preference-your-equity-could-be-worth-millions-or-nothing https://angel.co/blog/liquidation-preference-your-equity-cou...
- xondono 6y agoSeniority?
- jbay808 6y agoI believe those are the "preferred shares" that the founder in the article declined to offer to the investor protagonist.