Capitaly early access is opening now. New insights every week on venture and fundraising.Subscribe on Substack
Capital raising glossary
Liquidation preference
The payout order investors get in an exit.
Definition
A liquidation preference determines how proceeds are distributed when a company is sold or wound down. A 1x preference means investors get their money back before common shareholders are paid. Terms like participation and multiples can meaningfully change who gets what in an exit.
Related terms
Run your next raise on Capitaly.
Find investors, build your data room, and manage the whole round with AI. Set up your workspace in minutes.