Required ownership and present value from a target exit

STUD.com's own worked example for a prospective pre-seed check, every scenario figure ILLUSTRATIVE (STUD is pre-seed, pre-revenue, entity formation pending). The scenario: an investor puts in the $1,000,000 illustrative raise target today for 10 percent, projects a $120,000,000 exit in 6 years (a mid-case slice of the cited $8B, 42 to 50 percent CAGR AI agents market growing under STUD's living-system motion), targets a 40 percent gross annual IRR, and assumes 0.6 of today's ownership survives two later rounds. The discount-the-exit method: $1,000,000 compounded at 40 percent for 6 years must become $7,529,536 at exit, which is 6.27 percent of the projected exit, so with 40 percent future dilution the investor needs 10.46 percent today. The offered 10 percent lands just under that bar: the stake exits at $7,200,000, a 7.2x gross multiple, an implied 38.96 percent IRR. The strategic read for STUD's next negotiation: at this exit case and dilution path, 10 percent is within half a point of a clean 40 percent target, so the conversation is about the dilution assumption (fewer or smaller future rounds move 0.6 toward 0.75 and the same 10 percent clears a 43 percent IRR), not about squeezing the round. Whether the $120M exit or the 0.6 survival factor is right is founder and investor judgment, not graded arithmetic.