Seniority
The order in which investors are paid from exit proceeds.
Why it matters
In a standard stacked structure the newest money is paid first. In a modest exit, earlier investors and founders may receive nothing at all despite the company being sold successfully.
A worked example
With $40M of preferences across three rounds and a $30M exit, Series B recovers its $25M, Series A recovers $5M of its $12M, and seed and common receive nothing.
What is typical
Standard stacked seniority favours later investors. Pari passu, where all preferred shares are paid proportionally, is better for founders and earlier backers, and is worth asking for.
Related terms
Preference stack
The total of all liquidation preferences across every round, which must be repaid before common shareholders receive anything.
Read more →Liquidation preference
The amount investors are paid out of exit proceeds before common shareholders receive anything.
Read more →Run your raise on this
VCTerminal models these terms on your real cap table, so you can see what a term sheet pays you before you sign it.
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