Concept

Liquidation preference

Liquidation preference decides order and amount investors get before common on a sale or liquidation. A 'standard' term can erase upside in a soft exit. Model the stack against realistic outcomes — not the unicorn case.

Where founders get this wrong

Assuming 1x non-participating is always harmless without checking seniority and multiples in the stack.
Ignoring participating preferred or stacked prefs that quietly wipe common in mid outcomes.
Negotiating valuation while leaving preference language unread until counsel's redline.