[JumpCrisscross]

> Is declining to accept a liquidation preference at seed level a red flag for any serious investor?

Investors may be receptive to nixing liquidation preferences, particularly early on, if the founder agrees in writing to take no employment benefits. Asking an investor to relinquish their downside protection while retaining your own (a cash salary) is cause for further questions.

That said, it's awkward to (a) ask for capital while (b) prominently communicating that you see the risk of selling the business below where they've valuing it as being non-negligible. If you, as the founder, have that little faith in the venture, a better conversation may be hand about what can be done to increase your confidence in it.

Liquidation preferences aren't required, particularly later on. But you’ll give up on other terms by filtering for investors who don't care for them.

[naturalgradient]

Thank you for the response. It seems like liquidation preferences really come into play at growth stage when things get 'messier' due to capital needs, and declining them at seed round would send a very negative signal because the valuation must grow for any kind of success beyond the seed round?

[greglindahl]

From what gets printed in the press, it appears that lots of unicorns are having to agree to pretty high liquidation preferences in their latest rounds.