Share dilution calculator for multiple pre-money SAFEs, post-money SAFES and convertible notes.

Рет қаралды 5,190

Күн бұрын

Download the spreadsheet to analyze startup dilution from multiple convertible notes and SAFEs at:. www.startupsos.com/dilution
Convertible securities, including the convertible note and the SAFE (Simple Agreement for Future Equity) are popular startup funding mechanisms that entrepreneurs use particularly for angel funding, but they do result in equity dilution that is important for startup founders to understand.
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All types of convertible securities such as convertible notes, the Y Combinator SAFE (pre-money SAFE and post-money SAFE) can significantly add to your dilution when you do a priced round. So it's a good idea to use a share dilution spreadsheet to keep track of that dilution. The spreadsheet described in this video analyzes up to 10 pre-money SAFEs and/or convertible notes, plus up to 10 post-money SAFEs, all with a different investment amount and a different valuation cap (post-money valuation cap) and different pre-value cap or post-value cap.. And each can have a pro rata right that's included in the dilution calculation.
The spreadsheet as downloaded is pre-set with the example from Y-Combinator's Quick Start Guide to the pre-money SAFE - specifically the example the shows the dilution impact of a pre-money SAFE and a post-money SAFE.
Download the Y Combinator Quick Start Guide at
startupsos.com/docs/post-money...
You can use the information in this video to create your own spreadsheet, or, for a small fee, download the spreadsheet to analyze multiple convertible notes and SAFEs at:.
www.startupsos.com/dilution

Пікірлер: 17

@JulieGordonWhite 8 ай бұрын

Thank you so much for the thorough and understandable training. I purchased the spreadsheet and it is significantly more valuable than the nominal fee!

@craigknowles9911 2 жыл бұрын

Thank you for this, and the spreadsheet (which I purchased). It's exactly what I needed. I still need to get the numbers checked by a financial professional (which I am not), but it's a great tool to have on hand as we go through our first round of fundraising.

@deborahcharych4490 Жыл бұрын

Thank you greatly for sharing your deep expertise (and taking the time to explain it so well!). If we have a mix of convertible notes and post money SAFES, which Scenario applies? (It would seem Scenario 1 applies to the convertible debt whereas Scenario 2 applies to post money SAFES but may be misunderstanding!). It’s interesting from playing w the spreadsheet, it seems premoney valuation overrides, wrt dilution? So appreciate it, realize this is several years ago now!😊

@zhibiaopeng2582 Жыл бұрын

Hi, Thank you for this inspiring video. I have one question about it. (1) Why in Scenario 2, the final result is that Series A investors only get 22.5% but not 25%? I recall that the requirement is that after its investment and the expansion of option pools and shares converted by pre-money/post-money SAFEs, we need to make sure the percentage this Series A investor gets is still 25%? (2) If 22.5% is correct, what part diluted this Series A investor's percentage from 25% to 22.5%, is it the expansion of the option pools or the pro rata of post-money SAFE, or something else? Thank you!

@charlierobertson6178 Жыл бұрын

Hi Steve - Thanks for the great video and easy to use spreadsheet which I downloaded. I am running into a case where I can't solve the exact share % needed for Series A investors. My final post-money SAFE has a 20% discount and when I start to get close to the correct Series A share %, it flips between the valuation cap and discount shares and prevents me from getting right to the exact % of Series A % I need. Is this a common occurrence?

@albinealias6269 3 жыл бұрын

Valuable

@Startupsos 3 жыл бұрын

Thanks!

@inloveofmusic 4 жыл бұрын

Thank you for explaining this in such detail. At 12:09/26:21, you show total number of shares using SAFE price at 1,286,549.7. How did you arrive SAFE price for post-money SAFE? For $800,000 investment, your calculation of 1,286,549.7 shares yields per share price of $0.62. I'm getting share price of $0.73 ($8M pre-money divided by 11M shares). Wonder what you did and if you could explain the logic, that will be much appreciated. Many thanks.

@mitchchapman2888 4 жыл бұрын

Looking now at 20:16 I think something might be messed up in the calculation of 1,179,528.50. Seems like that # is NOT accounting for the increased options pool. But the pre money SAFE calculation @ 19:41 DID account for the increased pool. Why would you include the increased pool for one and not the other?

@Startupsos 4 жыл бұрын

Sorry for the very late reply. You get to 1,286,549.7 as follows: there are 11 million shares of pre-safe capitalization, plus 578,947.4 shares for the pre-money SAFES, so that's a total of 11,578,947.4 shares. The post-money SAFE investor is promised at least 10% of the SAFE round. So if X is the number of Post-Money SAFE shares, then X = 10% of (11,578,947.4 + X) In other words, the Post Money SAFE shares are 10% of the total, and the total is 11,578,947.4 plus the Post Money SAFE shares. Doing the math: X - 0.1X = 0.1 x 11,578,947.4 and so X = 1,157,894.47 / .9 = 1,286,549.7 So to get 10% they need to get that many shares. The price they pay is the amount they invested divided by 1,286,549.7

@Startupsos 4 жыл бұрын

Sorry for the late reply. I do believe the number is right (and agrees with the number in the Y Combinator Quick Start Guide example I use). This is an odd artifact of combining Pre-money and Post-money SAFEs. It is a bit mind-bending. To calculate dilution of a Pre-Money SAFE you must know (or assume) what the numbers are for the investment round that triggers the Pre-Money SAFE conversion. It is very typical (and true for Y Combinator's example) that a Pre-Money SAFE conversion is based on the fully diluted stock of the company - including new stock options required by the Series A. But the idea of a Post-Money SAFE round is that you consider it as an entirely separate investment round that precedes the "Series A" investment round, so it does not include the new stock options required by the Series A. But to calculate what the "SAFE round" looks like, you have to know how many shares will be issued for the Pre-Money SAFEs (and convertible notes, for that matter) and that means you have to use the fully diluted shares to calculate the Pre-Money SAFE conversion to stock. I hope that helps...

@mitchchapman2888 4 жыл бұрын

@@Startupsos Thanks for clarifying that.

@danielaterminel9383 Жыл бұрын

Hi! what if you have more than 10 safes?

@Startupsos Жыл бұрын

For more than 10, you would have to expand the spreadsheet!

@PeterGuzzardo Жыл бұрын

I bought the spreadsheet but it will not upload.

@fgsteiner7 3 жыл бұрын

This is way too complicated to follow if you want an introduction to SAFES. Have a look if you only if you have done loads of deals and you want to check if you have done it right -

@Startupsos 3 жыл бұрын

Agreed - this is not an introduction! This video describes a spreadsheet for analyzing dilution in a complicated scenario where you have pre-money SAFEs, post-money SAFEs and convertible notes. Definitely not for the beginner. For an introduction to the SAFE, see my videos on the pre-money SAFE (kzfaq.info/get/bejne/pLOYn9SmnM7VgKs.html) and the post-money SAFE (kzfaq.info/get/bejne/qtJoeMmLm7GldH0.html)