Preference shares from different rounds don't automatically rank equally.

Unless the certificate of incorporation says otherwise, each new round can outrank the ones before it.

Pari passu is Latin for "equal footing." It means two share classes get paid at the same time, from the same pool, in proportion to their preference size. Neither goes first. Without that language, the default is seniority stacking: the newest round gets paid in full before earlier ones.

Say a $2.5M exit has a $1M Series A preference and a $2M Series B preference. Under pari passu, Series A gets about $833,000 and Series B gets about $1,667,000. Under stacking, Series B gets its full $2M first, leaving Series A only $500,000.

Pari passu protects the value of an earlier investor's preference. Later investors usually only get it by giving up something else, like price or board control.

Anthropic has started meeting with investors. That's a sign its long-rumored IPO is getting closer, according to CNBC, cited by The Motley Fool.

Bloomberg says a listing could come as soon as October. No S-1 is public yet. Anthropic's last private valuation was $965 billion. For comparison, SpaceX hit a $2 trillion market cap on its first day of trading in June. That number has since dropped to about $1.6 trillion, a reminder that a strong opening price doesn't always last.

For employees and early investors holding options and preference shares, the wait for liquidity keeps getting shorter. But the real numbers, revenue and losses, stay private until the S-1 is actually filed.

Source: The Motley Fool | CNBC