Exit waterfall calculator.

How a 1x non-participating preference pays out

A liquidation preference is a right of one class of stockholders to be paid ahead of other classes when the company is sold or liquidated; in most venture-backed companies investors can get their invested capital back before any proceeds go to common stockholders (Cooley GO). With a non-participating preference, the investor receives either its preference amount only, or its proportionate share of the distribution without the preference, whichever is greater (Wikipedia).

This calculator applies that rule to up to three series at a 1x multiple. Each series either keeps its preference (1x the amount invested) or converts to common. A series converts when its as-converted share of what is left per percent of ownership beats its preference per percent. Everyone who is not in a preferred series (founders, employees and the option pool) is treated as common and owns the remainder of the percentage. Converting series share the leftover with common pro rata.

Worked example

Exit $25,000,000. Series 1 (Seed): $2,000,000 for 12%. Series 2 (Series A): $8,000,000 for 20%. Common: 68%. Series 2 takes its $8,000,000 preference, since 20% of $25,000,000 is only $5,000,000. Series 1 converts: the remaining $17,000,000 is shared by common and Series 1, 80% of the total, so each percent gets $212,500 and Series 1 receives $2,550,000, which beats its $2,000,000 preference. Common receives $14,450,000, and 8,000,000 + 2,550,000 + 14,450,000 = $25,000,000. For comparison, Wikipedia's 2x non-participating example, a $1M investment for 14.4% in a $15M sale, gives the investor the greater of $2M and $2.2M; at 1x and the same ownership the investor takes $2.16M by converting.

Limits

The model ignores dividends, participating or capped-participation terms, multiples above 1x, debt, transaction fees, management carve-outs, option exercise proceeds, SAFEs or notes that have not converted, and different conversion ratios. Seniority and conversion rules are set in the company's charter and financing documents; read yours. The ownership percentages are as-converted fully diluted percentages.

Sources, opened 8 October 2026: Cooley GO glossary, Liquidation Preference (a right to be paid ahead of other classes; in most venture-backed companies investors get capital back before common); Wikipedia, Liquidation preference (non-participating: the preference only, or the proportionate share, whichever is greater; the 14.4% / $15M example).