Waterfall Equity

Waterfall equity is the primary method used to distribute the equity gained from a group or pooled investment (e.g. angel group, angel syndicate, private equity…etc.) The distribution is aligned to the pecking order in which the largest investors, or limited and general partners are granted the largest portion. As a result, they also receive a disproportionately larger share of the total profits relative to their initial investment once an exit event occurs.

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