Scenario modeling for Investors - Waterfall modeling

What is it?

The waterfall modeling tool allows you to model exit scenarios for your portfolio company and understand the economic impact on share classes and top stakeholders.


Exit value: This input is for the exit value you want to run through the waterfall analysis.

Non-convertible debt: This input allows you to add any debt the company has that is not already captured on the capitalization table. This may include loans and other types of liabilities. 

Exit date: The exit date is used to decide the 'as of' date of the capitalization table. If the company has interest or dividends, they will continue to accrue value until the selected exit date.

Selected cap table: For users that have created cap tables through the financing round modeling tool or pro-forma valuations tool on Carta, you are able to switch the cap tables used in the scenario to any of the created cap tables.


Key metrics card: Shows you the cost of holdings, projected proceeds, projected IRR, projected return multiple based of the exit scenario.

Distributions: The distributions chart allows you to see a range of outcomes for your firm, top 5 shareholders, and share classes.

Payouts: Shows you the payouts for the exit scenario for by share class and top stakeholders.

Detailed results for your firm: Shows you the payouts and return multiple to your funds.

Goal seek:

Investors using the tool have the ability to goal seek to a desired IRR, Return multiple, or Payout. The goal seek will solve for required exit value needed to generated the inputted IRR, Return multiple, or Payout.

Math and Assumptions:

The waterfall feature uses the same breakpoint calculations that power our industry leading valuation software to calculate the payouts of your company based on your cap table data and modeled exit value.

Convertible notes: Convertible debt, equity and SAFEs will accrue any interest they are entitled to up until to selected exit date, and depending on their rights and preferences, will convert to common stock based on the modeled exit value and their valuation cap.

Options and equity awards: All issued equity awards are assumed to be fully-vested in the exit scenario.

Selected exit date: All issued equity awards are assumed to be fully-vested in the exit scenario as of the selected exit date.

Cases that are not currently supported:

  • Limited liability corporations
  • Management carve-outs and other post-exit terms
  • Anti-dilution 

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