7. What are liquidation preferences in a cap table?

Quick Answer:
They determine how investors are repaid during an exit or liquidation.

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Learn More:
A 1x liquidation preference means investors get their original investment back before others receive proceeds. Preferences can be participating (investors get both preference and share of remaining funds) or non-participating. Understanding these clauses is vital to modelling exit scenarios. Findex lets founders simulate preference outcomes to visualise distribution scenarios.‍

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