An exit waterfall is the order in which proceeds flow when a company is acquired or IPOs. Investors with preferred stock get paid first (their liquidation preference), then the remainder is split by ownership.
The calculator models a 2-round (Seed + Series A) waterfall with configurable preferences. Real cap tables can be more complex; this captures the dynamics that drive most outcomes.
Founders consistently underestimate how liquidation preferences change exit math. Two scenarios with the same exit value and same paper ownership can produce founder payouts differing by millions of dollars based on whether preferences are participating or not.
The most surprising result: 1x non-participating preferences are nearly invisible at high exit values (investors take pro-rata anyway). At low-to-medium exit values they take a real chunk. Run the calculator at multiple exit values to see the inflection.
Best, base, downside cases. The waterfall shifts dramatically across these — that's the point of the tool.
Each round's ownership is what they own AFTER their round closed. Earlier ownership gets diluted at later rounds.
Anything above 1x or participating is unusual — and dramatically reduces founder outcomes at moderate exits.
Toggle participating on/off, change preference multiples, vary exit values. The pattern that emerges shows where each term matters most.