Introduction to Scenario Modelling

You can model scenarios with multiple rounds and an exit. This builds on top of the latest cap table, and when you are ready, you can also convert the modelled round into transactions.

This article will cover

  1. Create a new scenario
  2. Model the financing round within the scenario
  3. Share the scenario internally or with potential investors
  4. Optional: Convert the modelled round

You might also want to visit these related articles for the advanced steps:

🌊 Before getting started, have you checked that your most recent cap table in Ledgy reflects the latest data? If so, let's dive in! 

 


 

1. Create a new scenario

  • To start, go to Ownership>Scenarios and add your first scenario.
    • Depending on your subscription, you may create multiple scenarios and compare them easily.
  • Define the scenario default settings in the pop-up window.
    • Rounding Policy

      • Rounded share price vs share price without rounding

        If you select the rounded share price, Ledgy will round the price to 2 decimals. If you don't want to round the share price, Ledgy will calculate with 10 decimals. If you're comparing the results with your excel data, make sure you're using the same amount of decimals in both places.

      • Round the number of shares down

        If you select to always round the shares down, the number of shares will be rounded down, no matter the decimal. For example, 2.4 and 2.7 will both be rounded to 2. The setting, in other words, defines if the actual investment is always lower than the committed investment.

    • Fully-diluted number of shares

      • We have suggested presets based that are either Founder Friendly or Investor-Friendly - you can always customise your own.

    • Convertibles only dilute existing stakeholders

      • Toggle on: only the stakeholders involved in the cap table before the modelled round, will be diluted. For the new stakeholders to not get diluted, they have to receive more shares. They receive more shares because the share price is lower than if the toggle was turned off. The round's share price is calculated using fully-diluted shares from before the round and converted loans. Share price=pre-money valuation/(pre-round fully-diluted shares+converted loan shares)
      • Toggle off: the "new" stakeholders will be diluted as well. The round's share price is calculated using only the fully-diluted share number from before the round. This means that the share price is higher than if the toggle is turned on. The direct result of that is that the new stakeholders receive fewer shares than if the toggle was turned on. Share price=pre-money valuation/pre-round fully-diluted shares
    • New pool shares only dilute existing stakeholders:
        • Toggle on: pre-round
        • Toggle off: post-round
  • After the scenario has been created with the initial settings
    • If you change your mind about the configuration, you can easily change these settings.
    • Want to test out the same scenario with a few tweaks? Use the duplicate scenario button to create a copy!

 


 

2. Model a new round

  • Name the round
  • Select Pre/Post valuation by clicking the Pre button, target round size, share class and expected closing date
    • 💡 The date is important for calculating the interest of your convertibles if they have it.
  • Create a new share class or use an existing one
    • 💡 If you want to model a round with certain share class characteristics (e.g. anti-dilution, liquidation preferences etc), you can create a new one on Ownership > Share classes before returning to the Scenarios page to select it from the list.
  • There are multiple types of transactions you can model. Click Add to select what you need:

    • Trigger convertibles
      • Click From transactions to trigger an existing convertible or ‘new convertible’ to create a new one for the round.
      • Note: Selecting From transactions will trigger all the existing convertible loans not converted. If for any reason, one is not to be converted in this round, simply delete the individual transaction on this modelled round
      • 💡Check that the conversion parameters and interest settings for convertibles are correct. Ledgy will calculate the share price based on these. For a new convertible, you’ll be able to define these as you add the new convertible and edit them on the modelled round directly. If an existing convertible needs editing, you can do so on the original transaction in Ownership > Transactions page.