Last week, two different VC fund CFOs told me that they spend a ton of time running exit scenarios for their own partners. Somebody hears a portfolio company might trade, walks over and asks, "What if we sold for $150 million? What about $175 million? What does the fund get, and what do I get? What will each founder get?" So the CFO stops what they were doing, starts searching for all the financing docs, charters and cap tables, in order to build the waterfall. Again.
That question gets asked at every level of a deal. The founder wants to know what the team clears after the preferred stack takes its cut. The investor wants to know what comes back to the fund and what that does to DPI. The fund CFO is the one who actually has to produce the number, and it's a hard number to produce, because a waterfall with three preferred classes, a note and three side letters will take an entire afternoon. So the person with the model gets asked, and everyone else waits.
Why it takes the whole afternoon
The math isn't what eats the time. What eats it is finding the terms and making sure they're the current ones. The liquidation preference for each series is in the charter, but it's the amended and restated charter from the last round, and if somebody grabbed the version from two rounds ago the whole stack is wrong. Whether a class is participating or non-participating, whether there's a cap on participation, and where each series sits in seniority are all in there too, and they changed when the new money came in.
Then there's everything outside the charter. A convertible note that's still outstanding at the exit might convert or might get paid out at a multiple, and which one depends on language in the note itself. A side letter might carry an MFN or a special right that someone has to check against the charter. The option pool has to be counted correctly, vested and unvested. None of it is exotic. It's just spread across a dozen documents signed over five or six years, and the CFO has to pull all of them before the first formula goes in.
And the answer moves with the price. A non-participating preferred holder takes the preference or converts to common, whichever pays more, so at $150 million one class might take its money off the top and at $175 million the same class converts and the whole split below it changes. That's why the partner asks for two numbers and then a third, and why each one sends the CFO back into the model.
The terms are already written down
The truth in private capital is in the documents. Every term that drives that waterfall sits in a series of documents that were executed across multiple years of financing deals. A waterfall is fairly simple arithmetic, once you have and understand the terms. That's the part that sucks up all the time.
That's what we built our scenario planning module to do. You connect GoodStream's private capital agentic harness to your document source and we do the rest. Investment agreements, the cap table, the charter, the side letters, the governance docs, the notes and even all of the company financials and performance reports. GoodStream reads, understands, extracts and associates all of it. Nobody keys anything in. Simply put, this is the most powerful AI ally you can have in private capital.
Knowing what you own and how much it is worth has always been hard to do in private capital. Thankfully those days are behind us.
Giving the hours back
There is a lot of work in the private markets that is slow and expensive for no better reason than the information sits in documents nobody has time to read. When our customers tell us about these needlessly difficult tasks, we extend our harness to understand the documents and give the hours back. An exit scenario that used to cost a CFO an afternoon is now something a partner can run a dozen different ways before the call is over.
I like what that does to the conversation, too. When the founder, the partner and the CFO can all look at the same waterfall, built from the same executed documents, nobody spends the meeting arguing about whose spreadsheet is right, and the founder gets to see exactly what the team takes home at each price instead of waiting for someone to send it over later.
