What is a typical liquidation preference?
Liquidation preferences are very common, almost universal, features of venture investments. A liquidation preference provides, in the event of a liquidation or sale of a company, that the holder of preferred stock will be paid an amount, often an amount equal to its initial investment plus accrued and unpaid dividends, before the holders of common stock are paid anything (referred to as a 1x return). As of this writing, typical market terms call for a 1x return.
