Not even that! Literally the valuation is a figment, especially without knowing the associated terms. $12m at $40m post-money with a 3x participating preferred? Literally all we know is the team has access to $12m in the bank to spend, not on their own salary, but on building a company called Magic. After the $12m is spent they should have a company that is worth $40m.

It's a bet that for every $1 the team spends they can create about $3 in value. Which at 5x revenue is to say, they can spend $12m and at the end of the day be cash flow neutral and have about $8m in ARR.

Throw in a liquidation preference on that $12m and what you actually have are golden handcuffs and high expectations but the work for this team all lays ahead of them not behind them.

Yes, and to let those people deploy their capital profitably for them.

pretty much.