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# Liquidation preferences on one napkin
- URL: https://weiter-money.nichedthemes.com/liquidation-preferences-napkin/
- Published: 2026-10-20T07:00:00.000Z
- Updated: 2026-10-20T07:00:00.000Z
- Description: Who gets paid first when the company sells, in three lines.
- Author: Elias Brandt
- Tags: The words, Terms, #memo, #Import 2026-11-11 10:07

**In short.** A 1x non-participating preference is normal. Anything above it costs you at a modest exit. Run the numbers at three exit sizes.

A preference decides who gets their money back first if the company sells. At a big exit it hardly matters. At a modest one it decides everything.

__A €12m exit after one €2m round at 1x__
| Investor preference | €2,000,000  |
| ------------------- | ----------- |
| Left for everyone   | €10,000,000 |
| Founders’ 70%       | €7,000,000  |

Now try 2x participating with the same numbers. Then decide whether the higher valuation was worth it.