Methodology
Breakpoint Engine is a deterministic financial-engineering engine for private-company equity structures. It exists so that the numbers behind a financing decision come from an actual valuation calculation rather than from improvised arithmetic. Same inputs, same calculation, same result.
The engine executes. You retain your assumptions, your judgment, and your decisions. Your cap table is never stored as a system of record — it is passed as a tool argument, computed on, and discarded. The delivered result, which carries the per-security allocations derived from that structure, is held for up to 48 hours so a retried request is answered rather than re-run and re-billed, then deleted.
Built on established valuation methodology
Breakpoint Engine has been audited and follows established AICPA/FASB valuation methodology.
It implements established Option Pricing Method (OPM) methodology for private-company equity structures — the family of methods described in the AICPA Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, used for fair-value measurement under FASB standards. The guide describes the methodology; the implementation is Breakpoint Engine's own.
Complex financing structures
The engine is built for the structures founders are actually offered, not simplified ones:
- Preferred securities — liquidation preferences, seniority, participation, caps, and conversion mechanics
- SAFEs and convertible instruments alongside priced preferred rounds
- Options and warrants, priced at their own strikes
- Breakpoints — the exact company values where economic participation changes
- Security-specific allocation of value across every class, including founder common
- Equity backsolve and volatility backsolve
- Interactive scenarios — change a term mid-analysis, step through the structure, branch alternatives, and compare them
Deterministic calculation
Breakpoint Engine performs the financial mathematics directly rather than asking a language model to estimate the result. Your AI interprets the question and explains the answer; every number it reports comes from an actual solve. That is what makes exploring alternatives meaningful — when a figure moves, it moved because the structure changed, not because the arithmetic did.
It is also the cheaper and faster way to get the answer. A solve returns the whole priced structure in a single call, where a language model reproducing the same mathematics pays for every step of it in generated tokens — so you can afford to ask the same question a dozen different ways.
Audited for accuracy
The methodology Breakpoint Engine runs by default was audited in the predecessor implementation this engine was ported from, and the two are held to the same answers by a corpus of golden fixtures that pins the engine's behavior calculation by calculation.
Neither AICPA nor FASB endorses, certifies, approves, or audits Breakpoint Engine. Naming their methodology describes what the engine implements, not a relationship with either body, and nothing here is an independent third-party opinion on the engine.
How the calculations are checked
Beyond those fixtures, an ongoing hand-computation programme derives results without the engine at all — worked from published sources and instrument terms rather than from engine output, in a component that does not link the engine, using normal-distribution numerics from a different published algorithm family so that agreement is evidence rather than restatement. Some of those hand computations reproduce worked examples printed in the guide exactly.
Be clear about what that is and is not. Those hand computations anchor to the published guide; they are not a conformance check of the shipped engine against it, and only a small share of them is compared against the engine today. Coverage is deliberately dimensional rather than exhaustive, and open questions stay recorded as open. So nothing here claims the engine has been exhaustively verified, or that it reproduces the published guide in full. What is claimed is narrower and checkable: results are reproducible, and the same inputs on the same engine version return the same numbers.
How founders use it
Connect your AI to the hosted Breakpoint Engine service and work conversationally: your AI interprets your financing questions and explains results; Breakpoint Engine performs the deterministic valuation mathematics underneath. Change a term, recalculate, compare — without rebuilding fragile spreadsheets.
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