Preference stack
The total of all liquidation preferences across every round, which must be repaid before common shareholders receive anything.
Why it matters
The most under-monitored number on a cap table. It only ever grows, and it explains how a founder can own a meaningful percentage of a company that sells for a respectable price and still receive very little.
A worked example
A company raising $3M, $12M and $25M at 1x carries a $40M stack. At a $45M exit only $5M reaches common. A founder owning 22% of the company receives about $2.75M, not the $9.9M a naive reading suggests.
What is typical
Later rounds are usually senior, meaning Series B is paid before Series A, which is paid before seed. Pari passu stacks, where all rounds share equally, are more founder-friendly.
Model your full preference stack →
Related terms
Liquidation preference
The amount investors are paid out of exit proceeds before common shareholders receive anything.
Read more →Participating preferred
Preferred stock that takes its liquidation preference AND then shares in the remaining proceeds according to its ownership.
Read more →Run your raise on this
VCTerminal models these terms on your real cap table, so you can see what a term sheet pays you before you sign it.
Start free