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
Preferred
Total
1,000,000
333,333
333,333
333,333
1,333,333

FD
%
75.0%
0.0%
0.0%
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

$
$
$
$

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%

Series B
Investment

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

True Pre-Money: $

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

%
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%

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?

Date

Series A 1x Straight Preferred

Series A Dividend
Total Series A Preference
Convert to Common?

Dividend
$

6/30/2010

6/30/2009

Per Share
5.47

Shares
913,833 $

0% $
$

5.47
1

913,833

2.40

416,667

416,667

0% $
$

2.40
1

Date
5,000,000

$
$

5,000,000

1,000,000

$
$

1,000,000

6/30/2009

Total Preferences

Remaining Common Proceeds

Common Proceeds
Series B
Series A
Common
Options
Total
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

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%

Dividend
$

6/30/2010
$

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.
Per Share
5.47

Shares
913,833 $

0% $
$

5.47
0

913,833

2.40

416,667

416,667

0% $
$

2.40
1

5,000,000

$
$

5,000,000

1,000,000

$
$

$
$
$
$
$

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

A/B convert to common and participate in

Common proceeds.

5,000,000

1,000,000

100,000,000
Shares
416,667
1,000,000
411,000
1,827,667

Lower than preferences of B but higher than A.

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

5,000,000

7,000,000

$
$
$
$
$

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

$
$
$

Per Share
36.48
36.48
36.48

% of Proceeds
33.3% $
15.2% $
36.5% $

33,333,333
15,198,492
36,476,382

$
$
$

5.47
3.83
3.83

41.7% $
13.3% $
31.9% $

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

36.48

15.0% $
100.0% $

14,991,793
100,000,000

3.83

13.1% $
100.0% $

1,574,138
12,000,000

6.7x
15.2x

1.0x
1.6x

OK
OK

OK
OK

B exercises preference .

A converts to common.

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

$
$
$
$

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%

Series B
Investment

%
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

Date

Series B Dividend
Total Series B Preference
Convert to Common?

6/30/2010

Series A 1x Straight Preferred

Series A Dividend
Total Series A Preference
Convert to Common?

Dividend

6/30/2009

Per Share
5.47

Shares
913,833 $

0% $
$

5.47
0

913,833

2.40

416,667

416,667

0% $
$

2.40
1

Date
5,000,000

$
$

5,000,000

1,000,000

$
$

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

5,000,000

1,000,000

Dividend
$

6/30/2010

6/30/2009
$

Per Share
5.47

Shares
913,833 $

0% $
$

5.47
0

913,833

2.40

416,667

416,667

0% $
$

2.40
1

5,000,000

$
$

5,000,000

1,000,000

$
$

5,000,000

1,000,000

Total Preferences

5,000,000

5,000,000

Remaining Common Proceeds

95,000,000

7,000,000

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

Investor receives preference and participates

in Common, effectively "double dipping".

$
$
$

Per Share
40.12
34.65
34.65

% of Proceeds
36.7% $
14.4% $
34.7% $

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

Percentage of proceeds is an important way

investors look at ownership.

34.65

14.2% $
100.0% $

14,242,203
100,000,000

$
$

8,636,364
13,636,364

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

% of Proceeds
61.1% $
8.9% $
21.3% $

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

2.55

8.7% $
100.0% $

1,049,425
12,000,000

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%