What does the liquidation preference clause look like in French Tech fundraising rounds?

The typical exit headline is quite standard, looking something like this:

AppsAreUs acquired by WeLoveApps for $225M

But while the headline number might be easy to understand, it doesn't say much about exactly how that purchase price will be divided. 

That’s because the money involved in a liquidity event doesn’t simply get sliced up and divided according to the percentages in a cap table. There can be creditors, shares vs. cash, and other elements in play. And one key factor in how proceeds are distributed is the presence – and details – of a liquidation preference clause.

Notably, having a liquid preference clause in the shareholder agreement is a virtual certainty as a tech company grows: indeed, in the 2024 data we surveyed, 100% of companies that reached a Series A+ round had one.

Because these clauses are both widespread and important, we wanted to give the French Tech ecosystem a glimpse of how they’re being applied. We gathered data from French Tech companies whose 2024 fundraising rounds, ranging from pre-seed through Series E, reached a cumulative value of $10.5B, and this report highlights the liquidation preference clauses found in those shareholder agreements. 

To provide even more practical value, the report also includes definitions and sample calculations that show how each aspect of a liquidation preference clause can impact the company's stock option plan (in France, a BSPCE).

You can read the 2024 French Tech Liquidation Preference Report right here.

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