Longtime HN member here. We created this project at Founders Fund over the last month and a half to give startup founders and employees an idea of the economic ramifications that follow from a term sheet. We have thoroughly vetted the underying model from some of the top attorneys in the valley and hope this can become a go-to for those raising money.
All comments and questions are welcome, I'll be here all day.
I assume you mean the existing option pool. Try changing the pool update to "post" (the radio button at the bottom) and you will see the outcomes change.
Hypothetically, you could own 100% of your company and have an option pool of x% and never allocate it to anyone, leaving you with full ownership of the company.
It does have an impact. If the update is included pre-investment, it won't have a noticeable impact on the economic outcome, but if it is not done pre-funding, it will. You can simulate this by toggling between "pre" and "post" at the bottom.
Note that we are changing it so that the pre-investment equity stake and option pool can't add up to > 100%. Thanks for the feedback!
Yeah, that makes sense or have it back in to founder's original ownership percentage. But that can also be confusing.
For those people out there who don't build financial models, making this "model" in a user friendly way is really, really challenging and you did a really nice job on it. My UX would have been terrible in comparison.
One Note: I didn't notice the pre and post buttons at the bottom because the text was hard to read on internet explorer on my office computer. It looks like the text was selected on a super high res monitor (like a nice mac) because on a "normal" office PC it is pretty rough.
Rather than providing one exit value, a graph over a range could be helpful, to illustrate key thresholds, like the slope-change introduced by preferences or the exit values needed to provide the founders/VCs a particular return.
Also, adding an optional 'months to exit' would allow displaying the effective internal rates-of-return for a given exit value.
There's also http://preferredreturn.com/calculator that has the graphing you describe and the ability to add multiple rounds. However, the FF one has a better interface for convertible debt & early stage.
This is a great tool! Nice work. I posted a similar tool on HN a while ago, which can be helpful if you want to click into the spreadsheet to see the calculations.
So awesome. Nice work and very good for the startup community. One minor "nice to have" request would be to show the VC Series A ownership in a dynamic calc. Since many VCs optimize for 20% ownership or whatever, it's helpful to plan out various scenarios to see the ownership there (obviously it's easy to calculate so no big deal but might be helpful).
14 comments
[ 3.3 ms ] story [ 41.8 ms ] threadAll comments and questions are welcome, I'll be here all day.
[ADDED] (maybe there should be an error if premoney valuation pool + owner's equity >100%?)
Hypothetically, you could own 100% of your company and have an option pool of x% and never allocate it to anyone, leaving you with full ownership of the company.
If it doesn't do anything, why include it? Maybe change it to distributed existing stock?
All that really matters is the option pool created/allocated during the series A.
Note that we are changing it so that the pre-investment equity stake and option pool can't add up to > 100%. Thanks for the feedback!
For those people out there who don't build financial models, making this "model" in a user friendly way is really, really challenging and you did a really nice job on it. My UX would have been terrible in comparison.
One Note: I didn't notice the pre and post buttons at the bottom because the text was hard to read on internet explorer on my office computer. It looks like the text was selected on a super high res monitor (like a nice mac) because on a "normal" office PC it is pretty rough.
Again, nice job on this.
You've made life a little easier for many startup founders with this. Thank you.
Rather than providing one exit value, a graph over a range could be helpful, to illustrate key thresholds, like the slope-change introduced by preferences or the exit values needed to provide the founders/VCs a particular return.
Also, adding an optional 'months to exit' would allow displaying the effective internal rates-of-return for a given exit value.
http://news.ycombinator.com/item?id=4263459
The Big picture is often a function of fine details.