Sign the flat round, or wait for the milestone?
Boards argue this one past each other because everyone quotes valuation, while the thing that actually differs between the two paths is what today's shareholders keep once it plays out. This tree prices both branches on that basis, rolls them back, and shows the risk profile sitting behind the winning expected value.
Finance Advanced Decision Tree Pro engine
After you install, this is the model to open.
Raise Now, or Wait for the Milestone?
- In your spreadsheet, click the Sortia icon in the strip of icons down the right-hand edge. No strip? Click the arrow at the bottom-right to open it. You can also use Extensions, then Sortia, then Open Sortia.
- Click Start from a template and put that name in the search box.
- Pick the card with that name and click Load this template. It arrives on a new tab with real numbers already in it.
This one runs on a Pro engine, and every free install includes five full-quality runs on your own numbers, shared across all five Pro engines rather than five for each. After that, Pro is $199/year.
The answer
Rolling the tree back hands it to waiting, and the risk profile explains why that is not the end of the conversation:
- Sign now, expected value
- $144.7M
- Wait, expected value
- $155.5M 7.5% better
- Worst case if you wait
- $116.0M at 18% probability
- Milestone odds where it flips
- 26% down from 55%
Waiting wins by $10.8M, about 7.5%, and it buys that edge with an 18% chance of the down round with a full ratchet at $116.0M, which is below anything the flat round can produce. That is the sentence to say out loud in the room. The recommendation holds, too: the milestone would have to look worse than one chance in four, down from 55%, before signing today became the better bet.
The model
Six leaves. Each is the ownership left after that path multiplied by a common $200,000,000 reference exit, expressed in millions of dollars kept by today's shareholders.
| Sign now, terms hold (85%) | $146.7M |
| Sign now, round re-trades (15%) | $133.3M |
| Wait, hit milestone, market open (44%) | $177.2M |
| Wait, hit milestone, market closed (11%) | $152.0M |
| Wait, miss milestone, insiders bridge (27%) | $148.0M |
| Wait, miss milestone, down round with ratchet (18%) | $116.0M |
Once it is in your sheet
- The model arrives with real numbers in it and runs as it stands, so you can press the button first and understand it second.
- Change the numbers to yours. The sheet marks which cells are inputs and which hold formulas, and most labels carry a note explaining the row.
- Press the run button at the bottom of the panel. It is labeled for the tool you are in, and the result lands on its own tab, with a written reading of it beside the figures.
Never used Google Sheets? Start here goes the whole way, in seven steps, and assumes nothing.
Next question
- What does ignoring correlation cost you?
- Do your two holdings actually diversify each other?How Two Assets Move Together
- Will you run out of cash this quarter?Will the Cash Last Thirteen Weeks?
- What are the odds you breach the covenant?How Close Is the Covenant?
- Every line looks fine. Will the year still go over?Will the Budget Hold?
- How far could next year miss the revenue plan?What Will Next Year's Revenue Be, as a Range?
Every model like this one, and the method behind them: Decision trees.