The Debt Equity Model is an Excel spreadsheet for venture-captial-funded startups to plan stock pricing, distributions, investing rounds and more. It was created by angel investment firm Blue Heron Ventures and startup law firm O&A, P.C. and is now open-sourced.
Branch: master
Clone or download
Fetching latest commit…
Cannot retrieve the latest commit at this time.
Permalink
Type Name Latest commit message Commit time
Failed to load latest commit information.
LICENSE
README.md
_config.yml
model_instructions.docx
model_instructions.pdf
oa_debt_equity_model.xlsx

README.md

Debt Equity Model for Startup Companies Seeking Venture Capital

The Debt-Equity Model is an Excel spreadsheet for venture capital-funded startups. This Model enables founders to model and track their company’s common stock grants, stock options, convertible notes, and SAFEs, visualize and anticipate how the convertible notes and SAFEs convert on a Series A, pre-money Series A valuation, and post-money Series A valuation, and understand the post-money Series A cap table for all equity holders, as well as exit or waterfall scenarios. Founders can model option refreshes, dilution, and fully diluted capitalization, as well as conceptualize how much equity they will hang onto after a Series A financing.

The Model was created by angel investment firm, Blue Heron Ventures, for its own angel investments and has since been implemented as a proprietary tool by venture and startup law firm, O&A, P.C. The Model is intended for use prior to Carta or Capshare and will then enable the tracking of Carta’s and Capshare’s accuracy on a going forward basis. Blue Heron Ventures is now open-sourcing the Debt-Equity Model under the creative commons license under CCO 1.0 http://creativecommons.org/publicdomain/zero/1.0/. For more info visit https://www.startupcaptables.com

The Excel workbook contains the complete Debt Equity Model. These are the instructions to filling out the model. There are 6 key tabs (listed in order as provided in the model):

  1. Common

  2. SAFEs & Notes

  3. Pro Forma -- Series A Inputs

  4. Post Money Cap Table

  5. Waterfall -- Single Scenario

  6. Waterfall -- Three Scenarios

Each tab will be discussed individually in the order above. As you become more familiar with the model, you will fill it out in the order you want. For the purposes of these instructions and for the sake of organization, we will stick with order provided.

As a general rule, anything that is highlighted in yellow with red text can be changed. These are the model inputs. DO NOT modify the format of the cells (e.g. change something "general" to "text" or "number" to "text", etc.). This will inevitably result in cascading impacts that can break the model. Leave all cell formats as-is.

Common

  • Cell A1 is the name of your company. Enter the name in this cell

  • In the Common Stock section (rows 8:18), you will enter in the following:

    • Name of the person receiving the stock, the purchase date of the stock, the number of shares, and the vest start date
  • In the Stock Options sections (rows 23:44), you will enter the following:

    • Cell D23 is the total Equity Incentive Plan -- this is the total pool of stock you have set aside for your employees

      • There is no grant date or vest start date for this number
    • For the rest of the rows you will fill out the employee name, the grant date, the shares (which cannot be more than the Equity Incentive Plan), and the vest start date

  • This is everything you need to input on this tab; nothing else should be touched

SAFEs & Notes

  • On this tab you will only input data in rows (5:24)

  • Enter the note/SAFE holder name, select with a dropdown SAFE or Note, the issue date, the principal, interest rate, discount, and cap.

  • This is everything you need to input on this tab; nothing else should be touched

Pro-Forma -- Series A Inputs

  • On this tab you will only input data into 4 cells:

    • F18, the Pre-Money Valuation

    • F20, the New Series A Money

    • F24, the Anticipated Close Date (this is the Maturity Date on the SAFEs & Notes tab)

    • F30, the % Option Refresh

  • This is everything you need to input on this tab, nothing else needs to be touched

Post Money Cap Table

  • There is nothing to edit on this tab

  • This tab shows the outcome from the inputs on the other tabs

Waterfall -- Single Scenario

  • On this tab you will only input data into 1 cell:

    • C16, the Exit Value
  • This allows for a quick evaluation of price/share and gives a quick overview of the exit strategy

  • This is everything you need to input on this tab, nothing else needs to be touched

Waterfall -- Three Scenarios

  • This tab is like the Waterfall -- Single Scenario, but gives a more detailed breakdown of the logic behind the exit strategy

  • It allows you to put in three different exit values and will produce the price/share and the logic behind the exit results

  • You will only enter data into 3 cells:

    • C18, Exit Value (Scenario 1)

    • C36, Exit Value (Scenario 2)

    • C54, Exit Value (Scenario 3)

  • This is everything you need to input on this tab, nothing else needs to be touched

Final Note: If you do not have an input for a cell that allows for an input, make sure to leave it as-is. DO NOT delete any of the input place holders. You can alter them with a different input (e.g. on the Common tab, change the Equity Incentive plan from 1,000,000 to 0 or 1,000,000 to 500,00, but DO NOT DELETE the input.

The Debt Equity Model is open sourced under CCO 1.0 http://creativecommons.org/publicdomain/zero/1.0/

DISCLAIMER: The Debt Equity Model and any content related thereto ("Content") is provided for general informational purposes only and is not intended to and does not constitute legal advice, legal opinion, legal services, create an attorney client relationship, or act as advertising or solicitation of any type under any circumstances. Because legal advice cannot be given without consideration of all relevant information relating to your circumstances, you should never consider the Debt Equity Model or any of the Content obtained herein as a substitute for advice from qualified counsel or a basis for any decision, action, or inaction whatsoever. Further, Blue Heron Ventures, Inc. and O&A, P.C., together with their respective shareholders, officers, employees, contractors and agents do not warrant or guarantee that the Debt Equity Model or Content is accurate, comprehensive, or up-to-date, and expressly disclaim any warranties with respect to the Debt Equity Model and the Content. The Debt Equity Model and any Content may not reflect recent developments in the law or apply to your specific jurisdiction or set of facts or circumstances. Your use of the Debt Equity Model or any information contained in the Content is entirely at your own risk.