Cap Table and Exit Waterfall Tool

Documentation #

Each sheet in the model is detailed below, with links to documentation as relevant.

• README
  Contact into, overview on model. Safe to delete or hide. Details on the colors and formatting in the model at Model Formatting.

• License
  Terms of use of the model. Safe to delete or hide.

• Example Cap Table
  Core cap table example, used to model 1+ rounds of issuing equity to investors (new and proratas to existing investors), as well as converting premoney and postmoney SAFEs, convertible notes, issuing option pools, and more. Easy to use for proforma cap table analysis and scenario modeling for evaluating the impact of raising funding on ownership, dilution, and more.

  • Video: How to add in additional rounds
  • Video: Modeling an equity round
  • Video: Modeling convertibles
  • Video: Modeling options

• Example Cap Table, with Anti Dilution
  Core cap table example, adding prebuilt anti-dilution protection for preferred equity investors if the option is selected and if it is applicable based on new share prices. This handles ownership dilution and value dilution, and for situations where the investor is issued new shares as well as the conversion ratio is changed. In addition to the implementation options, the amount of anti-dilution protection can be calculated using full ratchet and weighted average (broad-based and narrow-based) anti-dilution protection, and this is calculated separately for each investor with anti-dilution protection.

  • Video: Modeling anti-dilution

• Example Cap Table, Issuing Equity
  Example cap table, only modeling the issuance of an equity round

  • Video: Modeling an equity round

• Example Cap Table, Issuing Options
  Example cap table, modeling the issuance of an equity round and an option pool

  • Video: Modeling options

• Example Cap Table, Converting SAFEs and Notes
  Example cap table, modeling the issuance of an equity round and converting SAFEs and Convertible Notes

  • Video: Modeling convertibles

• Example Exit Waterfall
  Core exit waterfall example (also calleda liquidation waterfall or liquidation analysis), using a predistribution cap table and assumptions for exit prices to calculate equity distribution to each class of shareholder, using pari-passu or seniority by shareholder class, based on liquidation preferences, optional participation rights, optional dividends, option and warrant exercise based on strike prices, and more. There are two versions of this, one the base waterfall and another called Exit Waterfall, Extended that adds a couple more shareholder classes.

  • Video: Modeling exit waterfalls

• Example Exit Waterfall, Simple
  The third exit waterfall sheet Exit Waterfall, Simple is a different way to create a waterfall that intentionally does not work for some terms of preferred investments and thus will not work for all cap tables, but is easier to adapt and use for the situations it is built to handle.

  What this sheet can do:

  1. Easy to extend to many classes of preferred, common, options and warrants at different strike prices
  2. Nonparticipating preferred liquidation preferences
  3. Distributions to many classes of shares at different share prices
  4. Liquidation preference multiple not equal to 1 (input the amount of preferences, reflecting the multiple * amount invested)
  5. Preference stack of multiple classes of preferred senior to each other, and also classes pari-passu to each other (set the seniority for each row)
  6. Sub-classes of share classes to account for shares of a class given to investors at different share prices

  What this sheet cannot do:

  1. Participating preferred with a cap or full participating preferred liquidation preferences. (Only nonparticipating preferred is currently supported with this sheet, all options are covered by default in the standard Exit Waterfall sheet)
  2. Dividends on preferred investments (default option in standard Exit Watefall sheet)
  3. Conversion ratio from Preferred to Common not equal to 1 (default option in standard Exit Watefall sheet)
  4. Testing for unconverted convertibles to pay as debt or as equity (contact me for custom solutions for this)

  People often ask how to modify the standard Exit Waterfall sheet for their situation (adding share classes, handling unconverted convertibles being the most commonly requested changes), but usually I advise building a custom exit waterfall in those situations because it can be much simpler to build a waterfall for a known situation and financing terms rather than extend a model built for a wider range of situations that will not be applicable. This Exit Waterfall, Simple sheet is an attempt to bridge that gap with a structure that will be easier for users to adapt to their particular situation, since by intentionally not handling a few complicated structures the default formulas can be much easier for people to understand and edit.

• Resources
  Links to other models and resources for modeling venture capital funds and investments, from around the web. Safe to delete or hide.

• Glossary
  Glossary of key terminology in the model. Safe to delete or hide.

• Changelog
  List of what has been changed in model versions. Safe to delete or hide, although I'd advise to hide (instead of delete) so can always check to see what model version you are using to compare to future changes.

More Tools for Modeling Cap Tables #

I am a fan of Angelcalc for analyzing investment rounds, which does a good job of allowing you to model different rounds, different types of investments (equity, convertible notes, premoney and postmoney SAFEs), and seeing how the cap table changes (ownership, dilution, and more) when new rounds happen.

Tactyc's Cap Table Calculator and Carta's Safe and Convertible Note Calculator are two other tools that will automatically take inputs around your cap table and convertible instruments and calculate how they convert in equity rounds.

I do not build my spreadsheet to be a tracking or cap table management tool, which is why it does not handle some specific functions to track options vesting and per-investor details; Alexander Jarvis provides a spreadsheet that is intended to be a cap table tracking tool with more features to support that usecase.

Once you're running a company, I highly suggest using an online cap table management platform, as it will provide more functionality and features to help make sure that all the details are correctly entered and maintained, which is one of the difficult things to handle with spreadsheets. A few to consider:

• Pulley
• Carta
• Angellist Equity
• Ledgy
• Cake
• Dilligent Equity