Deal Terms
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Quick Answer
Latin for 'equal step' — describes securities or investors treated equally, with no one having priority over others in the same class.
Pari passu is a Latin term meaning 'on equal footing.' In venture capital, it describes situations where investors in the same financing round are treated equally — same rights, same price, same preferences. All Series A preferred shareholders are pari passu with each other: if one gets a pro-rata right, they all do; if one gets 1x preference, they all do. Pari passu becomes important in complex cap tables with multiple rounds or special classes: if one investor negotiates 'most favored nation' (MFN) rights, they receive the same economic terms as any more favorably treated investors. In debt contexts, pari passu means lenders have equal priority in receiving repayment.
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Pari passu is a Latin term meaning 'on equal footing.' In venture capital, it describes situations where investors in the same financing round are treated equally — same rights, same price, same preferences.
Understanding Pari Passu is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Pari Passu falls under the deal-terms category in venture capital. This area covers concepts related to the financial and legal terms that define investment agreements.
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