Don’t think I completely understand what you are asking but let me try to answer based on whatever I understand. If your Seed investor comes in and gives you the deal you mentioned it seems fair to you because even you don’t want to sell the company for less than 10M. Well firstly, some times you don’t have a choice. What if, for whatever reason, you are not able to raise the next round. Your options might diminish and a $5–10M acquihire exit might probably be the only option on the table. If you take it, you’ll probably not be getting anything because of the preference. Secondly, as I mention, liquidation preference is a tricky beast as the next guy usually will like to be at the same pref also. From the new (say Series A) investors’ perspective if on an exit the previous guy is getting 3x they should also ask for it. So your Series A investor might also ask for a capped participating preference. It might look something like 3x preference till you exit at $30M valuation but beyond that 1x. Now you’ve just made your life more difficult as suddenly your bar for exit is much higher. And this will not stop and usually gets worse and worse as you go along. Instead if you have a non participating in Seed round, you can realistically push back in the Series A as well (especially if you have more than 1 interesting party).