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Cap Table and Exit Waterfall Analysis
Send the cap table, the charter and the financing documents, and get the proceeds every holder receives across a range of exit values.
River reads the seniority, the participation and every preference multiple out of the charter, then runs the stack across the exit values you name. The output nobody else prints is your share of the next dollar. Corvenna Systems' founders hold 18.0 per cent of 40,000,000 fully diluted shares, and depending on where the price lands they keep between nothing and 42.4 cents of each additional dollar. That figure changes six times across the range, and it does not change in one direction.
Every waterfall model prints totals at four or five exit values. Read across the row and the numbers rise, which tells you nothing about whether the next increment is worth fighting for. Corvenna's founders keep 24.0 cents of the marginal dollar between $91,750,000 and $129,250,000, then 32.7 cents between $129,250,000 and $176,000,000, then 18.0 cents above $180,000,000. So $10,000,000 of extra price is worth $3,270,000 in one band and $1,800,000 in another.
Written for the founder holding an offer, for the investor marking a position that a mid-case exit would wipe, and for anyone about to sign a round whose terms will set these bands for the next five years. Instruments that have not converted yet are a different calculation, handled by the SAFE and note conversion model. The ownership section of an investment memo rests on this, and the legal read of the same documents is an equity and cap table legal review.
Your ownership percentage is not your share of the next dollar
Two clauses at Corvenna set the whole shape. Series C put in $35,000,000 at a 1.25 times preference, so it holds $43,750,000 senior to everything. Series B put in $18,000,000 as participating preferred capped at two times, so it takes its $18,000,000 and then shares in the residual until its total reaches $36,000,000. Neither number appears on a cap table. Delaware law is why: the preferences and participating or other special rights are whatever the certificate of incorporation says they are.
The band structure falls out of that. Below $72,250,000 the preference stack absorbs everything and the founders get nothing. Series B's participation runs out at exactly $129,250,000, where its total hits $36,000,000, and it stops sharing the residual. That is why the founders' marginal share rises from 24.0 to 32.7 cents at that point rather than falling. Above $176,000,000 Series C converts, above $180,000,000 Series B converts, and the founders settle at their fully diluted 18.0 per cent.
The clauses also hurt different people. At a $95,000,000 exit the founders take $7,980,000, and the 1.25 times multiple costs them $2,863,636 of that while Series B's participation costs another $2,901,818. Seniority costs them nothing, because there is enough to pay everyone. At $60,000,000 it costs Series A everything: tiered, Series A and Seed get zero and $8,719,724 moves to B and C. Conversion and liquidation rights are separately enumerated attributes for good reason, and a model that collapses them misses which one is biting.
How it works
Send the cap table
Shares by class and the price each class paid. An export from any platform is fine.
Add the documents
The current charter and the financing agreements, including any amendment that restated the terms.
Name a range
Two exit values or ten. The breakpoints are found between them rather than assumed.
Read the bands
What each holder gets, where the bands change, and which clause moved each one.
What you get
- Your share of the next dollar of exit value, band by band, with every breakpoint
- Every holder's proceeds across the range, reconciled so the column sums to the exit value
- The conversion crossover for each series, solved jointly rather than one series at a time
- A price tag on each clause, so the multiple, the participation and the seniority are separated
- The exit value below which common receives nothing, stated as a single number
- The terms read out of the charter and financing documents, with the ones you could not produce named
- Which clause hurts founders and which one only moves money between investors
Common questions
Why does the marginal share go up in the middle of the range?
Because a capped participating series drops out of the residual once it hits its cap, and everyone left divides a bigger slice. Series B at Corvenna stops sharing at exactly $129,250,000, where its total reaches two times its $18,000,000. Above that point the founders keep 32.7 cents of each dollar instead of 24.0.
Can I not just read the terms off the term sheet?
The term sheet says what was agreed and the charter says what was filed, and they diverge more often than anyone expects, usually because a later round restated the terms of an earlier one. The document that governs is the certificate in force at the exit. A term sheet from three rounds ago is history, not a term.
How is the conversion decision solved?
Jointly, because a series choosing to convert changes the residual every other series is choosing against. Corvenna's Series C converts above $176,000,000 while Series B holds out until $180,000,000, so the most senior and most expensive series gives up its preference first. Testing each series on its own gets that order backwards.
What does the seniority structure change?
Which investor gets wiped, mostly, rather than what the founders get. At Corvenna's $60,000,000 case a tiered stack pays Series C and B in full and leaves Seed and Series A with nothing, moving $8,719,724 between investors while common receives zero either way. Founders are hit by multiples and participation, not by seniority.
Does it handle options and the unissued pool?
Yes, and they are treated separately, because vested in-the-money options share the residual while unissued pool shares dilute the percentage without ever claiming proceeds. Corvenna's 1,800,000 pool shares are 4.5 per cent of the fully diluted count, which is 4.5 per cent of every band the founders are reading.
What if I cannot find one of the financing documents?
The run states which terms it read from a document and which it could not confirm, rather than filling the gap with a market standard. Seed rounds are the usual missing one, and the risk is asymmetric: an unusual seed preference is rare, but a restatement buried in a later amendment is common and moves real money.
Is this legal advice on my documents?
No. It reads what the documents say and computes what follows arithmetically. Where drafting is genuinely ambiguous, and participation caps and seniority language often are, the output flags it for counsel with the amount between the readings rather than picking one and presenting it as settled. Before the documents exist, an investor term sheet negotiation checklist prices the terms being drafted.
Cap Table and Exit Waterfall Analysis
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