Seniority (Liquidation Stack)

The order in which preferred series are paid when the exit cannot cover every preference. Standard, or stacked, seniority pays the latest round first and each earlier round after it. Pari passu pays all preferred classes together, pro rata to what each is owed. Which one a Series A term sheet asks for is the seed investor’s problem, and they know it.

How a startup is financed · 18 of 26Next: Anti-Dilution Protection

Practise it

The same cheque written six ways: common, non-participating preferred, participating preferred with and without a cap, a SAFE still unconverted and a convertible note. Slide the exit value and watch who gets paid, in what order, and where each instrument converts.

Open Exit Waterfall Lab, free, 12 min

Where Seniority (Liquidation Stack) comes up

Liquidation Preferences and Preferred Stock, ExplainedOwnership is a fraction. A preference is a choice. Every instrument a venture investor holds is a different rule for making it, and the exit value decides which way it goes.Read the guide — 13 min How to Build an LBO Model: The Build Order That Survives a Modelling TestUnder a 90-minute clock, the build order is the difference between a returns number and a half-finished model.Read the guide — 13 min

Keep reading

The venture capital hub

Related Venture Capital terms

Non-Participating Preferred Full Ratchet Liquidation Preference Weighted Average Anti-Dilution Preferred Stock (Venture)Pro Rata Rights

How a startup is financed: keep going

Go further than reading

The written material is free. These are the ways to get it applied to your own work.

CV Review by a Human

Written margin-note feedback on structure, impact bullets and ATS-readability. Reviewed by Suro, not an AI score.

$25 48h turnaround

Cover Letter Review by a Human

Line-by-line review of argument, tailoring and tone, with a rewritten opening as a worked example.

$50 48h turnaround

L3VLUP Pro

The subscription: personalised alerts, Apply Packs, every answer marked, full history and the whole research library.

$25 /month

Browse the full glossary — 263 finance recruiting and technical terms, in plain English.