Deal Terms
Liquidation Analysis
A calculation showing how exit proceeds would be distributed among shareholders based on their liquidation preferences and rights.
Liquidation analysis (or waterfall analysis) models how acquisition or IPO proceeds flow to each class of shareholder. It accounts for liquidation preferences, participation rights, conversion optionality, and anti-dilution adjustments to show what each party actually receives.
In Practice
The liquidation analysis showed that in a $100M exit, Series B investors would get $30M (their 1.5x preference), Series A would get $15M, and common shareholders would split the remaining $55M — but in a $500M exit, all preferred would convert to common for a larger share.
Why It Matters
Liquidation analysis reveals the true economics of a deal. A company valued at $200M might deliver very different returns depending on the terms stacked on the cap table.
VC Beast Take
Run the waterfall analysis before you celebrate the valuation headline. The number that matters isn't what the company is worth — it's what YOU get paid.
Further Reading
Common Angel Investing Mistakes and How to Avoid Them
The most costly mistakes angel investors make — from insufficient diversification and ignoring terms to falling in love with founders and skipping reference checks. Plus how to avoid each one.
409A Valuations Explained: Why They Matter for Your Stock Options
The 409A valuation sets the price you pay for your stock options. Here's how it works, why early employees get a better deal, and what happens to your strike price as the company grows.
How to Evaluate a Startup as an Angel Investor
A practical framework for assessing pre-seed and seed startups — covering team, market, traction, business model, and terms. Plus the red flags that experienced angels never ignore.
What a Series A Process Actually Looks Like
The Series A is where fundraising gets real — partner meetings, deep diligence, and term sheet negotiations. Here's a realistic week-by-week breakdown of what to expect.
Lead Investor vs Follow-On Investor: What Founders Need to Know
Your lead investor sets the terms, anchors the round, and signals to the market. Getting this wrong can stall your fundraise for months. Here's how lead and follow-on dynamics actually work.
How to Get a Job in Venture Capital: The Definitive Guide (2026)
The complete guide to venture capital careers: roles from analyst to partner, salary ranges at every level, interview prep, and proven strategies to break in — even without a finance background.
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