Stages 1-2 (pre-seed and seed through Series A)
Hold the line on liquidation preference
A founder at S1 or S2 negotiating a term sheet must decide which preference and board terms to accept because control and ownership outlast the headline valuation.
Options
Accept one times non-participating preference
Accept participating or multiple preferences
Trade board control for a higher valuation
What mattered
- Pre-money versus post-money changes ownership from the same number
- Participating preferred lets investors collect twice
- Oversized option pools are computed pre-money and dilute founders
- Board control decides direction; dilution only costs money
What was done
The sessions concluded founders should confirm pre or post-money in writing, hold at one times non-participating, size the pool to twelve months of hires, and keep boards at three to five seats.
ClaimTreat anything above one times non-participating preference as a warning about the investor, not a negotiating point.
FAQ
- Which stage does this apply to?
- Stages 1-2 (pre-seed and seed through Series A).
- Where does this come from?
- Synthesized from FounderNexus founder sessions, with speakers abstracted.
FounderNexus convenes stage-matched founder groups around decisions like this one.