A Share Dilution Spreadsheet for Convertible Note and Y combinator SAFE Startup Funding

It's important for founders to understand what the dilution impact will be of their convertible notes and/or Y-Combinator SAFEs. You can use the share dilution spreadsheet (see link below), a share dilution calculator, to understand founder share dilution from convertible securities. It applies to convertible notes and the original pre-money SAFE, two very common forms of startup funding (and in particular angel funding). Understanding how convertible securities affect the capitalization table (cap table) can help founders minimize their equity dilution.
The spreadsheet takes in to account convertible note cap, convertible note discount, SAFE cap, and SAFE discount and shows two different methods of conversion to stock and how the different methods result in different founder share dilution.
In a later video we'll walk through a share dilution spreadsheet for the post-money SAFE.
Download the Note/SAFE spreadsheet at:
www.startupsos....

[@gillykanz]

thanks from Melbourne Australia - - love your videos Steve - clear and concise. cheers

[@672279664]

Hi Seteve thanks for the video. Can I ask about the calculation of Convertibles in scenraio 2 please? At 13:20 you mentioned that the number of Convertible shares shall remain to be 150k. This is calculated based on the cap price of $3.6, and which is calculated from the 1M Founder shares + 111,111 Option shares required. 111,111 Option shares are calculated based on the 10% pool requirement. But in scenario 2 the 10% option pool requirement would result in 164,285 Option shares, why shouldn‘t the cap price be affected accordingly? Or is the scenrio contemplating a situation there was a 10% pool pre-existing and which would be diluted by the note conversion but shall be refreshed to 10% again? Thanks!

[@julianvandenberg5032]

Great info. I was unable to download the spreadsheet from the link provided in email?

[@patricesauro6675]

Hi Steve. Could you have a situation where you're offering an optional convertible note but with no subsequent investor round? The notes simply convert at maturity date and the company valuation is determined by a multiple on the EBITDA at maturity. We could still have a cap or discount so that the founders do not give away more than x% of the share capital. How can I tweak the spreadsheet to calculate the ownership of the founder and the converted new shareholders only? Thank you very much.

[@MartinGlastetterJr]

Great job, looking forward to checking out your additional videos. very helpful Steve, cheers!!

[@jaesonbang5710]

Thank you so much. Question on Founders share on B7 abd B30,,,, I changed B7 to 8M... shouldnt B30 also show changes to reflect that?

[@Startupsos]

Thanks for catching that! You are correct. Fortunately, the calculation refers to B7 so the result of the spreadsheet is, I believe, still correct.

[@joaq9790]

Thanks Steve! very helpful to me your video and your excel model.

[@Startupsos]

Glad it helped!

[@merlinnj5778]

Very clear and helpful info. Great delivery as well, thanks so much!!

[@Startupsos]

Glad it was helpful!

[@michaelmenary8665]

Hi Steve, I've clicked the link to download the spreadsheet but havent received it. Please can you send this to me? thanks

[@Startupsos]

Complete this form and you'll receive an email link that downloads the spreadsheet to your download folder: www.startupsos.com/note-pre-safe-dilution-spreadsheet/

[@hunnygirdhar1348]

Love it

[@ramizein541]

Can we download the spreadsheet with multiple SAFEs?

[@Startupsos]

Yes - the download attached to this video can handle multiple SAFEs: ua-cam.com/video/aFhv8gz7nq0/v-deo.html

[@mihir1690]

price per share 3.48 at fixed round? (4,000,000/1,150,000)

[@Startupsos]

Pre-money for the priced round is $8M so the best "guess" as to the right price is $8,000,000/1,150,000, which is still too high to give the Series A investors the 20% they want, so iteration to the "right" price is still needed.