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Liquidation Preference Definition

Liquidation preference – n : term included in many venture capital financing agreements. States that the investors in a given round will receive a set multiple of their investment before investors in earlier rounds see any return. For example, investors in a B round deal with a 2x liquidation preference would receive 2x their investment before investors in the A rounds and earlier received a return.

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Adapted from "The CompanyCrafters Entrepreneur's Dictionary"
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