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%

Series A
Investment

$ 1,000,000
$
$
$ 1,000,000
$ 3,000,000
$
3.00
$ 1,000,000
$ 4,000,000
6/30/2009

Series A Funding
Series A
Post-Money
FD
Preferred
Total
%
1,000,000 75.0%
0.0%
0.0%
333,333
333,333 25.0%
0.0%
0.0%
333,333
1,333,333 100.0%

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 Option Pool

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

New Options

True Pre-Money: $

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

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%

Including options in the pre-money calculation is

very common in term sheets.

Note the lower price per share despite same premoney valuation due to the new options. This values
the pre-money company prior to options at $2.4

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 Option Pool

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

New Options

True Pre-Money: $

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

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

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

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

True Pre-Money: $

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

Series B
Investment

$
$
$
$

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 Option Pool

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

New Options

True Pre-Money: $

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

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

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

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

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

%
54.7%
0.0%
22.5%
22.8%
0.0%
0.0%
100.0%

True Pre-Money: $

9,119,095

Series B
Investment

$
$
$
$

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

Date
6/30/2010

Total Series B Preference

Convert to Common?
Series A 1x Straight Preferred
Series A Dividend
Total Series A Preference
Convert to Common?

6/30/2009

Dividend
$
0% $

Per Share
5.47
-

5.47
TRUE

$
0% $

2.40
-

Shares
913,833 $
913,833 $

5,000,000
-

5,000,000

$
$

1,000,000
-

1,000,000

416,667
416,667

2.40

Date
6/30/2010
$

6/30/2009
$

TRUE
$

Remaining Common Proceeds

$100,000,000

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% $

Per Share
5.47
-

5.47
FALSE

$
0% $

2.40
-

Shares
913,833 $
913,833 $

5,000,000
-

5,000,000

$
$

1,000,000
-

1,000,000

416,667
416,667

2.40

5,000,000

Lower than preferences of B but higher than A.

B exercises preference .

A converts to common.

TRUE

Total Preferences

Common Proceeds
Series B
Series A
Common
Options
Total

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.

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

% of Proceeds
33.3%
15.2%
36.5%
15.0%

$
$
$
$

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

100.0% $100,000,000

Shares % of Proceeds
0.0%
416,667
22.8%
1,000,000
54.7%
411,000
22.5%
1,827,667
100.0%

A/B convert to common and participate in Common

proceeds.

$
$
$
$

5.47
3.83
3.83
3.83

41.7%
13.3%
31.9%
13.1%

5,000,000

7,000,000

$
$
$
$
$

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

$
$
$
$

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

B does not participate in Common proceeds.

100.0% $ 12,000,000

6.7x
15.2x

1.0x
1.6x

Important criteria of how well the investment

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

OK
OK

OK
OK

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 Option Pool

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

New Options

True Pre-Money: $

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

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

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

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

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

%
54.7%
0.0%
22.5%
22.8%
0.0%
0.0%
100.0%

True Pre-Money: $

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

Date
6/30/2010

Total Series B Preference

Convert to Common?
Series A 1x Straight Preferred
Series A Dividend
Total Series A Preference
Convert to Common?

6/30/2009

Dividend
$
0% $

Per Share
5.47
-

5.47
FALSE

$
0% $

2.40
-

Shares
913,833 $
913,833 $

5,000,000
-

5,000,000

$
$

1,000,000
-

1,000,000

416,667
416,667

2.40

Low Scenario
$ 12,000,000
$
4.38
6/30/2011
Date
6/30/2010

5,000,000

6/30/2009
$

Dividend
$
0% $

Per Share
5.47
-

5.47
FALSE

$
0% $

2.40
-

TRUE

Shares
913,833 $
913,833 $

5,000,000
-

5,000,000

$
$

1,000,000
-

1,000,000

416,667
416,667

2.40

5,000,000

TRUE

Total Preferences

5,000,000

5,000,000

Remaining Common Proceeds

$ 95,000,000

7,000,000

Shares % of Proceeds
913,833
33.3%
416,667
15.2%
1,000,000
36.5%
411,000
15.0%
2,741,500
100.0%

$
$
$
$
$

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

Per Share % of Proceeds

8.02
61.1%
2.55
8.9%
2.55
21.3%
2.55
8.7%

$
$
$
$

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

Common Proceeds
Series B
Series A
Common
Options
Total
Total Proceeds
Series B
Series A
Common
Options
Total
Series B
Effective Pre-Money Valuation
Effective Post-Money Valuation
Multiple of Cost
Series B
Series A

Check if Proceeds are above Preference:

Series B
Series A

$
$
$
$

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%

$
$
$
$
$

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

Per Share
40.12
34.65
34.65
34.65

% of Proceeds
36.7%
14.4%
34.7%
14.2%

$
$
$
$

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

100.0% $100,000,000

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.

$
$
$
$

100.0% $ 12,000,000

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

7.3x
14.4x

1.5x
1.1x

OK
OK

OK
OK

Series B
Investment

$
$
$
$

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%