ProFundraising · Simulator
Liquidation Preference Waterfall
Who gets what when the company sells.
Assumptions
Investor payout
$9,000,000
Common payout
$21,000,000
Investor chooses
Convert
| Line | Amount |
|---|---|
| Exit value | $30,000,000 |
| Preference (1x) | $5,000,000 |
| As-converted value | $9,000,000 |
| Investor takes | $9,000,000 |
| Common (founders/team) | $21,000,000 |
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Built by The Crimson Bench · Educational model, not financial advice
About the Liquidation Preference Waterfall
Model a 1x preference against common ownership to see whether investors take their preference or convert — and what founders keep.
It's built for directional planning: change any assumption and watch the whole projection move, the way a seasoned operator pressure-tests a plan before committing capital. Everything is computed live in your browser — nothing is sent anywhere.
How the Liquidation Preference Waterfall Works
The model takes 4 assumptions and returns 3 headline metrics plus a full breakdown. Here is exactly what goes in and what comes out — no black box.
The Inputs
| Assumption | Example value |
|---|---|
| Exit value | $30,000,000 |
| Preferred invested | $5,000,000 |
| Preference multiple | 1 |
| Investor ownership | 30% |
Worked Example
Every figure below is produced by the live model using the example assumptions above. Change any input in the simulator to see your own numbers.
Investor payout
$9,000,000
Common payout
$21,000,000
Investor chooses
Convert
| Line | Amount |
|---|---|
| Exit value | $30,000,000 |
| Preference (1x) | $5,000,000 |
| As-converted value | $9,000,000 |
| Investor takes | $9,000,000 |
| Common (founders/team) | $21,000,000 |
The Operator's Read
At this exit the investor converts to common — the upside beats the preference. Preferences only bite in modest exits; in a big one everyone rides the same equity. Educational only.
Assumptions & Limitations
- •The model is deterministic: it projects your inputs forward with clear arithmetic, not a Monte-Carlo or probabilistic forecast. It shows one scenario at a time — run several to bracket a range.
- •Defaults are illustrative benchmarks, not your business. Replace every field with your real numbers before drawing conclusions.
- •It abstracts away taxes, financing, seasonality, and one-off events unless a field explicitly captures them. Treat the output as a directional estimate.
- •This is an educational tool, not financial, investment, tax, or legal advice. Validate real decisions with a qualified professional.
Frequently Asked Questions
What does the Liquidation Preference Waterfall calculate?
Model a 1x preference against common ownership to see whether investors take their preference or convert — and what founders keep. It takes 4 assumptions — Exit value, Preferred invested, Preference multiple, Investor ownership — and returns Investor payout, Common payout, Investor chooses, along with a full projection table you can export.
How do I use the Liquidation Preference Waterfall?
Enter your own figures in the input fields above — Exit value, Preferred invested, Preference multiple, and the rest. The model recalculates instantly and shows the resulting Investor payout and full breakdown. No sign-up needed to run it.
Is the Liquidation Preference Waterfall free?
Yes — you can run the simulator and see the headline results for free. Toolkit Pro unlocks the full projection table, Excel/PDF export, saved scenarios, and AI analysis: $180/mo, $1,728/yr, or unlock any 3 simulators for $20.
What's the difference between this and a free calculator?
A calculator answers one question. This simulator models the full picture — multiple linked assumptions, a projection table, and scenario comparison — the way an operator would build it in a spreadsheet, but instantly.
Who built the Liquidation Preference Waterfall?
The Crimson Bench's Ivy League-educated operators — the same people we deploy into C-suites. This is the self-serve version of a model they'd build inside a live engagement.
Is this financial advice?
No. The Liquidation Preference Waterfall is an educational modeling tool for directional planning — not financial, investment, tax, or legal advice. Validate any real decision with a qualified professional.
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The Crimson Bench · Est. 2002 · Founded in New York City
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