As an avid Microsoft Excel user and former math geek, I was pleasantly surprised to find that a large part of my job as a tech start-up lawyer involves using both my Excel and math skills in my work with capitalization tables. In its simplest form, a capitalization table is a spreadsheet or table that provides details on the ownership in a company. It can help determine the answers to many important questions, such as:
- How many and which shareholders will need to consent before the company can take a certain action?
- How many shares would equal a specific percentage in the company?
- How might a transaction impact the ownership interests of existing equity holders?
- How would everyone be paid out if the company was sold?
We’re happy to announce that you can get some of these questions answered quickly and directly here on Founders Workbench through our new Capital Calculator. It allows founders to input certain variables, including:
- Outstanding convertible notes
- Company's pre-money valuation
- Total proposed investment
- Size of the option pool
- Preferred shares participating
- Total accrued or declared and unpaid dividends on the preferred shares
- Exit value of the company
With these inputs, the app will calculate the dilution to the founders base and the distribution of proceeds in a hypothetical exit event, based on certain assumptions.
The Capital Calculator is also available as a web-based mobile app for iOS and Android devices.
We hope you find this new tool useful. Stay tuned for more blog posts on dilution and liquidation.