Liquidation preference calculator

A liquidation preference lets an investor take its money back, or a multiple of it, before ordinary shareholders when the company is sold. Non-participating means the preference or its share, whichever is more.

The formula

Liquidation preference = investor takes its preference or its share, whichever is more

Worked example: £1,000,000 to the investor

The example uses the guide's seed round, £200,000 for 20%, with a matching cap table, exit, fund and market.

The larger of £1,000,000 (1x preference) and 20% of £3,000,000: £1,000,000

Try it with your numbers

Work out your liquidation preference

It starts on the example. Replace any figure with your own; nothing you type leaves your browser.

Your deal numbers

Start with any one figure. Each one you add works out more below. Your numbers are kept in this browser only.

What this calculation uses

Sale price of the company (needed)

What the preferred investor put in (needed)

What the preferred investor owns (needed)

1x2x

Participating preference

What the founders own

Add more of your numbers

Open a group to fill it in. Everything you add shows up in the list below the calculator.

An investment offer

Investment offered

For this share of the company

Your round

Pre-money valuation

You can type 2m or 750k.

New investment

Shares in issue

Options already granted

Unallocated option pool

In shares. 0 if you have none.

Option pool wanted after the round

Your own shares

Money converting at the round

Amount converting

From an ASA, SAFE or loan note.

Valuation cap

Leave blank for no cap.

Discount

Interest a year (loan notes)

Months since the note was issued

An investor's return

Amount invested

Share bought

Later dilution

30 means later rounds shrink that share by 30%.

Sale price at the exit

Years to the exit

The next round

Share you own now

Size of the next round

Its pre-money valuation

Last round's post-money

New round's pre-money

A venture fund

Fund size (committed)

Paid in by investors so far

Invested in companies so far

Paid back to investors

Value of what the fund still holds

Your market

Potential customers

What one pays a year

Share you can serve

Share of those you could win

A SEIS, EIS or VCT investment

Amount an investor puts in

Shares that vest

Shares or options granted

Vesting period

Cliff

Months worked so far

Your liquidation preference

£1,000,000

to the investor

The larger of £1,000,000 (1x preference) and 20% of £3,000,000: £1,000,000

At this price the preference is worth more to the investor than its share, so founders get less than their percentage.

Formula: Investor takes its preference or its share, whichever is more.

Founders receive: £1,500,000
Everyone else: £500,000

How to read your result

Preferences matter most in modest sales. At high prices a non-participating investor converts and everyone shares in proportion.

Watch out for

A participating preference pays the investor twice on the same shares. Check for it in the term sheet.

Last checked 24 October 2026. Estimates only, not financial, tax or legal advice: check your accounts and documents, and take advice before you act. More terms in the startup glossary.