In my post, Preferred Stock:  Liquidity Preference, I describe how liquidity preferences are paid before common stock. 

Investors in each round of funding a company are likely to require a liquidity preference, meaning that series A, series B and series C investors may each have their own liquidity preferences that need to be paid out before common.  As a result, when another round of investment is made the total liquidity preference typically increases. 

While this might seem daunting to entrepreneurs at first read, this is usually palatable as the company is typically closer to realizing a high exit valuation (that more than covers that liquidity preference) with each subsequent round of investment.