FundraisingAdvanced

Liquidation Preference

A term that decides who gets paid first (and how much) if the company is sold. A "1× preference" means investors get their money back before founders see anything.

Example

With a 1× pref, an investor who put in ₹2 crore takes the first ₹2 crore of any sale.

Related terms

Term Sheet

A short, mostly non-binding document that lays out the key terms of an investment before the full legal paperwork is drawn up.

Valuation

How much your company is judged to be worth. 'Pre-money' is the value before new investment; 'post-money' is pre-money plus the money raised.

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