Introduction
This article will explain how you can model scenarios for your future financing rounds in Ledgy. You will learn how to create a new scenario, how to model the financing round within the scenario, and how to preview the transactions of your scenario.
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!
📹 You can also get acquainted with this feature by watching the video below:
Note: The direct sharing feature shown in this video is no longer available. To share information with investors, you can either invite them to the platform as stakeholders or export the data to Excel.
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
Ledgy will round the price to 2 decimals if you select the rounded share price. If you don't want to round the share price, Ledgy will calculate with 10 decimals. If you compare the results with your Excel data, ensure you use the same number of decimals in both places.
Round the number of shares down
If you select always to 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 that are either Founder Friendly or Investor Friendly - you can always customize your own.
Convertibles Only Dilute Existing Stakeholders
Toggle on: Only existing stakeholders are diluted by the convertible conversion.
When convertibles convert, they're included in the share count before calculating the share price for new investors. This means:
Converted loan shares are added to the fully diluted count
This increases total shares, which lowers the price per share
New investors pay this lower price and get more shares for their money
New investors are not diluted by the convertible conversion
Share price = Pre-money valuation / (Pre-round fully-diluted shares + Converted loan shares)
Toggle off: Both existing stakeholders AND new investors are diluted by the convertible conversion.
Convertibles are not included when calculating the share price. Instead:
Share price is calculated using only pre-round shares
This creates a higher price per share
New investors pay this higher price and get fewer shares
After the round closes, convertibles then convert, diluting everyone (including the new investors who just invested)
Share price = Pre-money valuation / Pre-round fully-diluted shares
New pool shares only dilute existing stakeholders
Toggle on: pre-round
Only existing stakeholders are diluted by the new pool.
Toggle off: post-round
Both existing stakeholders AND new investors are diluted by the new pool.
After the scenario has been created with the initial settings:
If you change your mind about the configuration, you can easily change these settings.
If you wish to test the same scenario with a few tweaks, use the duplicate scenario button to create a copy!
2. Model a New Round
Click on the "+ Round" tab and give the round a name.
💡 The date is important for calculating the interest of your convertibles if they have it.
Select an existing share class.
If you need a new share class, please go to Ownership > Share Classes and create it there.
💡 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 on Ownership > Transactions page.
Investments
New Investment
You can define the investment amount from new and existing investors.
To select a new investor name, toggle the switch "Use custom stakeholder" and type the new investor details in the name field. Alternatively, you can search for the name of an existing investor from the drop-down list.
Pro-rata Investment
You can distribute an investment pro-rata across all or selected existing investors who are shareholders. This will take into account their current proportions of fully diluted percentages.
Add Investment By a Fixed Percentage
You can add an investment as a fixed percentage to give investors an exact ownership stake. For example, if an investor wants a particular % of ownership, Ledgy automatically calculates the required investment amount to achieve this ownership.
If you are defending an existing investor’s position, once the investment by percentage has been created, click on the Three Dots to "Set pre-round percentage".
💡All investments are eligible for a discounted share price. Once the investment has been added, click on the Three Dots to select "Discount share price".
Add Pool
Similar to investment by percentage, pool sizes can be defined by percentage. You create a new pool and enter its fully diluted percentage.
You can also defend the position of an existing pool by clicking on "Set pre-round percentage".
Now that you've modeled your round, let Ledgy handle the calculations! 🦾
Above the calculations, you will find the updated details on the following:
Pre/Post-money valuation,
Total round size,
Issue price,
The number of issued shares.
Below the calculations, you will also find the post-financing cap table.
You can see the dilution for any stakeholder here. There you will see the updated cap table with an extra column showing the 'Diluted Change' in green/red colour code.
3. Preview the transactions in your scenario
Once your new round has been confirmed 🎉, you can preview how the modelled investments, convertibles and pools will look as transactions. So, you can manually create these transactions in your cap table.
Can't get enough of Scenario Modelling? 😏 Neither can we!
Visit these separate articles to find out more about Modelling an exit .
Your frequently asked questions are covered in this FAQs article. If anything is missing, please don't hesitate to contact [email protected].