Pari Passu

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.