Trust and method

How we know the numbers are right.

A waterfall tool is only useful if you can rely on it, and if you can see why. Here is how it works and how it is checked.

The method

Every class of security is turned into a rule for how much it receives at any given price. The tool finds the value of one common-equivalent share at which all those payouts add up exactly to the equity value, then pays every class from that one number: preferences by rank, conversion decisions, participation and caps, options net of their strike, and SAFEs and notes at the better of their cap and discount price. There is no circular calculation to iterate and no setting to remember.

Breakpoints, the payout curve and the exit values at which a holder reaches money back are found by repeating the same calculation across a range of prices, so every view comes from one engine and cannot disagree with another.

Exact to the cent

Money is calculated in exact decimal arithmetic, not ordinary floating-point numbers, and each class is settled to the cent with the leftover cents given to the largest fractions. The classes always add up to the equity value exactly, and an export is blocked if they do not.

How it is tested

• Reference parity. Results match an independent option-pricing calculation engine and an independent reference spreadsheet to the cent on the cases they share.
• Randomised structures. On every change, randomly built cap tables using every feature (tied ranks, participation and caps, dividends, conversion ratios, options, warrants on preferred, SAFEs and notes with pre- and post-money caps and discounts, debt) are checked at hundreds of exit values. Classes must add up to the cent, no class may be paid less as the price rises, and inside every tier each class's payout must be a straight line with exactly the stated share of the next dollar.
• Awkward inputs. Zeros, huge amounts, tiny prices and impossible terms must produce a clear message or sensible numbers, never a crash or a meaningless figure.
• Hand-worked examples. Simple cases, such as a capped participating preferred, are worked out by hand and checked line by line.

The same checks found, and we fixed, real issues during development: two SAFEs whose caps together claimed more than 100% of the company, and a small gap where SAFEs diluted each other's caps. We would rather say so than pretend there were none.

What it does not do

• It does not read your legal documents. It calculates from the terms you enter, so check them against the articles, shareholder agreement and instruments.
• It is not legal, tax or investment advice, and it does not produce a valuation opinion.
• Terms can be defined in more than one way. A participation cap, for example, is treated as a limit on the total received as a multiple of the amount invested. If your documents define it differently, the result will differ.

Your data

You enter the terms of a structure. You do not upload legal documents or personal records, and we do not sell or share what you enter. The anonymised export removes company and class names so results can be shared without saying whose company it is. Accounts, encryption and access controls are being built before paid plans open, and we will describe them here when they are live.

Verification

Excel exports carry a short verification code so a recipient can confirm a workbook matches the version it came from. The check reveals only a match or no match.