NewCo Inc.

Pro Forma Cap Table

Start-up Capitalization

Founders
Options Granted
Options Available
Investor 1
Investor 2
Investor 3
Total
Pre-Money Valuation
Price / Share
Total $ Invested
Post-Money Valuation
Date

Common
1,000,000
250000

1,250,000

Total
1,000,000
0
250,000
0
0
0
1,250,000

%
80.0%
0.0%
20.0%
0.0%
0.0%
0.0%
100.0%

Series A
Investment

$1,000,000
$$$1,000,000
$3,000,000
$2.40
$1,000,000
$4,000,000
6/30/2009

Series A Funding
Series A
Post-Money
Preferred
Total
1,000,000
250,000
416,667
416,667
416,667
1,666,667

FD
%
60.0%
0.0%
15.0%
25.0%
0.0%
0.0%
100.0%

Founders diluted by
25%
Investor desires 25%
ownership.

NewCo Inc.
Pro Forma Cap Table
Start-up Capitalization

Founders
Options Granted
Options Available
Investor 1
Investor 2
Investor 3
Total
Pre-Money Valuation
Price / Share
Total $ Invested
Post-Money Valuation
Date

Common
1,000,000

1,000,000

Total
1,000,000
0
0
0
0
0
1,000,000

%
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%

New Options

250,000

250,000

New Option Pool

Pre-Money
Total
1,000,000
0
250,000
0
0
0
1,250,000
True Pre-Money:

Series A
Investment

%
80.0%
0.0%
20.0%
0.0%
0.0%
0.0%
100.0%
$2,400,000

$1,000,000
$$$1,000,000
$3,000,000
$2.40
$1,000,000
$4,000,000
6/30/2009

Series A Funding
Series A
Post-Money
Preferred
Total
1,000,000
250,000
416,667
416,667
416,667
1,666,667

FD
%
60.0%
0.0%
15.0%
25.0%
0.0%
0.0%
100.0%

Including options in the pre-money calculation

is very common in term sheets.

Note the lower price per share despite same

pre-money valuation due to the new options.
This values the pre-money company prior to
options at $2.4 million.

NewCo Inc.
Pro Forma Cap Table
Start-up Capitalization

Founders
Options Granted
Options Available
Investor 1
Investor 2
Investor 3
Total
Pre-Money Valuation
Price / Share
Total $ Invested
Post-Money Valuation
Date

Common
1,000,000

1,000,000

Total
1,000,000
0
0
0
0
0
1,000,000

%
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%

New Options

250,000

250,000

New Option Pool

Pre-Money
Total
1,000,000
0
250,000
0
0
0
1,250,000
True Pre-Money:

Series A
Investment

%
80.0%
0.0%
20.0%
0.0%
0.0%
0.0%
100.0%
$2,400,000

$1,000,000
$$$1,000,000
$3,000,000
$2.40
$1,000,000
$4,000,000
6/30/2009

Series A Funding
Series A
Post-Money
Preferred
Total
1,000,000
250,000
416,667
416,667
416,667
1,666,667

New Option Pool

Pre-Money
Total
1,000,000
0
161,000
411,000
416,667
0
0
161,000
1,827,667

New Options
60.0%
0.0%
15.0%
25.0%
0.0%
0.0%
100.0%

True Pre-Money:

Series B
Investment

%
54.7%
0.0%
22.5%
22.8%
0.0%
0.0%
100.0%
$9,119,095

$1,000,000
$4,000,000
$$5,000,000
$10,000,000
$5.47
$5,000,000
$15,000,000
6/30/2010

Series B Funding
Series B
Post-Money
Preferred
Total
1,000,000
411,000
182,767
599,433
731,067
731,067
913,833
2,741,500

FD
%
36.5%
0.0%
15.0%
21.9%
26.7%
0.0%
100.0%

% Preferred
0.0%
0.0%
0.0%
45.1%
54.9%
0.0%
100.0%

Note who controls a majority of Preferred.

This is important for voting rights.

NewCo Inc.
Pro Forma Cap Table
Start-up Capitalization

Founders
Options Granted
Options Available
Investor 1
Investor 2
Investor 3
Total

Common
1,000,000

1,000,000

Total
1,000,000
0
0
0
0
0
1,000,000

%
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%

New Options

250,000

250,000

New Option Pool

Pre-Money
Total
1,000,000
0
250,000
0
0
0
1,250,000
True Pre-Money:

Pre-Money Valuation
Price / Share
Total $ Invested
Post-Money Valuation
Date

Series A
Investment

%
80.0%
0.0%
20.0%
0.0%
0.0%
0.0%
100.0%
$2,400,000

$1,000,000
$$$1,000,000

Series A Funding
Series A
Post-Money
Preferred
Total
1,000,000
250,000
416,667
416,667
416,667
1,666,667

New Option Pool

Pre-Money
Total
1,000,000
0
161,000
411,000
416,667
0
0
161,000
1,827,667

New Options
60.0%
0.0%
15.0%
25.0%
0.0%
0.0%
100.0%

True Pre-Money:

$3,000,000
$2.40
$1,000,000
$4,000,000
6/30/2009

Series B
Investment

%
54.7%
0.0%
22.5%
22.8%
0.0%
0.0%
100.0%
$9,119,095

$1,000,000
$4,000,000
$$5,000,000

Series B Funding
Series B
Post-Money
Preferred
Total
1,000,000
411,000
182,767
599,433
731,067
731,067
913,833
2,741,500

%
36.5%
0.0%
15.0%
21.9%
26.7%
0.0%
100.0%

% Preferred
0.0%
0.0%
0.0%
45.1%
54.9%
0.0%
100.0%

$10,000,000
$5.47
$5,000,000
$15,000,000
6/30/2010

Exit Waterfall
High Scenario
$100,000,000
$36.48
6/30/2011

Exit Value
Value Per Share (as-converted basis)
Exit Date
Liquidation Preferences
Series B 1x Straight Preferred
Series B Dividend
Total Series B Preference
Convert to Common?
Series A 1x Straight Preferred
Series A Dividend
Total Series A Preference
Convert to Common?

Date

Dividend

6/30/2010

0%

6/30/2009

0%

Per Share
$5.47
$$5.47
TRUE

Shares
913,833
913,833

$2.40
$-

416,667
416,667

$2.40
TRUE

$5,000,000
$$5,000,000

$1,000,000

Total Preferences

Total Proceeds
Series B
Series A
Common
Options
Total
Multiple of Cost
Series B
Series A
Check if Proceeds are above Preference:
Series B
Series A

Dividend
0%

6/30/2009

0%

$-

Per Share
$5.47
$$5.47
FALSE

Shares
913,833
913,833

$2.40
$-

416,667
416,667

$2.40
TRUE

$5,000,000
$$5,000,000

$1,000,000

% of Proceeds
33.3%
15.2%
36.5%
15.0%
100.0%

$33,333,333
$15,198,492
$36,476,382
$14,991,793
$100,000,000

Per Share
$36.48
$36.48
$36.48
$36.48

% of Proceeds
33.3%
15.2%
36.5%
15.0%
100.0%

$33,333,333
$15,198,492
$36,476,382
$14,991,793
$100,000,000

$-

Lower than preferences of B but higher than A.

B exercises preference .

A converts to common.

$5,000,000

$100,000,000
Shares
913,833
416,667
1,000,000
411,000
2,741,500

$5,000,000

$1,000,000
$-

$-

Remaining Common Proceeds

Common Proceeds
Series B
Series A
Common
Options
Total

Date
6/30/2010
$-

$1,000,000
$-

Low Scenario
$12,000,000
$4.38
6/30/2011

Value per share if everyone converted to

comon. Note it is greater than preferences of A
and B.

$7,000,000

A/B convert to common and participate in

Common proceeds.

Shares
416,667
1,000,000
411,000
1,827,667

% of Proceeds
0.0%
22.8%
54.7%
22.5%
100.0%

$$1,595,842
$3,830,020
$1,574,138
$7,000,000

$5.47
$3.83
$3.83
$3.83

41.7%
13.3%
31.9%
13.1%
100.0%

$5,000,000
$1,595,842
$3,830,020
$1,574,138
$12,000,000

6.7x
15.2x

1.0x
1.6x

OK
OK

OK
OK

B does not participate in Common proceeds.

Important criteria of how well the investment

performed. VCs typically aim for 4-10x returns.

Important check to make sure investor

proceeds are greater than or equal to their
preferences.

NewCo Inc.
Pro Forma Cap Table
Start-up Capitalization

Founders
Options Granted
Options Available
Investor 1
Investor 2
Investor 3
Total

Common
1,000,000

1,000,000

Total
1,000,000
0
0
0
0
0
1,000,000

%
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%

New Options

250,000

250,000

New Option Pool

Pre-Money
Total
1,000,000
0
250,000
0
0
0
1,250,000
True Pre-Money:

Pre-Money Valuation
Price / Share
Total $ Invested
Post-Money Valuation
Date

Series A
Investment

%
80.0%
0.0%
20.0%
0.0%
0.0%
0.0%
100.0%
$2,400,000

$1,000,000
$$$1,000,000

Series A Funding
Series A
Post-Money
Preferred
Total
1,000,000
250,000
416,667
416,667
416,667
1,666,667

New Option Pool

Pre-Money
Total
1,000,000
0
161,000
411,000
416,667
0
0
161,000
1,827,667

New Options
60.0%
0.0%
15.0%
25.0%
0.0%
0.0%
100.0%

True Pre-Money:

$3,000,000
$2.40
$1,000,000
$4,000,000
6/30/2009

Series B
Investment

%
54.7%
0.0%
22.5%
22.8%
0.0%
0.0%
100.0%
$9,119,095

Exit Waterfall
High Scenario
$100,000,000
$36.48
6/30/2011

Exit Value
Value Per Share (as-converted basis)
Exit Date
Liquidation Preferences
Series B Full Participation
Series B Dividend
Total Series B Preference
Convert to Common?
Series A 1x Straight Preferred
Series A Dividend
Total Series A Preference
Convert to Common?

Date

Dividend

6/30/2010

0%

6/30/2009

0%

Per Share
$5.47
$$5.47
FALSE

Shares
913,833
913,833

$2.40
$-

416,667
416,667

$2.40
TRUE

$5,000,000
$$5,000,000

Total Preferences

6/30/2009

Per Share
$5.47
$$5.47
FALSE

Shares
913,833
913,833

$2.40
$-

416,667
416,667

0%

$2.40
TRUE

$5,000,000
$$5,000,000

% of Proceeds
33.3%
15.2%
36.5%
15.0%
100.0%

$31,666,667
$14,438,568
$34,652,562
$14,242,203
$95,000,000

Total Proceeds
Series B
Series A
Common
Options
Total

Per Share
$40.12
$34.65
$34.65
$34.65

% of Proceeds
36.7%
14.4%
34.7%
14.2%
100.0%

$36,666,667
$14,438,568
$34,652,562
$14,242,203
$100,000,000

$5,000,000

$1,000,000
$$1,000,000

$-

$5,000,000

$95,000,000
Shares
913,833
416,667
1,000,000
411,000
2,741,500

Check if Proceeds are above Preference:

Series B
Series A

0%

$-

Common Proceeds
Series B
Series A
Common
Options
Total

Multiple of Cost
Series B
Series A

Dividend

$5,000,000

Remaining Common Proceeds

Series B
Effective Pre-Money Valuation
Effective Post-Money Valuation

Date
6/30/2010
$5,000,000

$1,000,000
$$1,000,000

Low Scenario
$12,000,000
$4.38
6/30/2011

$7,000,000

Investor receives preference and participates

in Common, effectively "double dipping".

Percentage of proceeds is an important way

investors look at ownership.
In a big exit, participation doesnt matter as
much. The smaller the exit, the more effect
participation has.

Shares
913,833
416,667
1,000,000
411,000
2,741,500

% of Proceeds
33.3%
15.2%
36.5%
15.0%
100.0%

$2,333,333
$1,063,894
$2,553,347
$1,049,425
$7,000,000

Per Share
$8.02
$2.55
$2.55
$2.55

% of Proceeds
61.1%
8.9%
21.3%
8.7%
100.0%

$7,333,333
$1,063,894
$2,553,347
$1,049,425
$12,000,000

$8,636,364
$13,636,364

7.3x
14.4x

1.5x
1.1x

OK
OK

OK
OK

$1,000,000
$4,000,000
$$5,000,000
$10,000,000
$5.47
$5,000,000
$15,000,000
6/30/2010

Series B Funding
Series B
Post-Money
Preferred
Total
1,000,000
411,000
182,767
599,433
731,067
731,067
913,833
2,741,500

%
36.5%
0.0%
15.0%
21.9%
26.7%
0.0%
100.0%

% Preferred
0.0%
0.0%
0.0%
45.1%
54.9%
0.0%
100.0%