ABCDEFGHIJKLMNOPQRSTUVWXYZ
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VariablesValues (to change)ResultsValues (calculated)
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C = total cash payable for the period$12,500(Fixed) Upfront cash payment = C * P$2,500
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P = percentage of cash payment upfront20.00%(Option A: taking cash) Remaining cash payment = C * (1 - P)$10,000
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M = discount or multiplier used when converting sweat cash to equity cash2.85(Option B: taking equity) Equity grant = C * (1 - P) * M / E0.71%
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T = pre-or post- money valuationPOSTUSING POST-MONEY VALUATION AT $4,000,000.00
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V = valuation at next priced round$4,000,000E = effective valuation, i.e. max(min(V, CEILINGv), FLOORv) $4,000,000
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CEILINGv = valuation ceiling (to protect contractor from over-diluting when converting)$5,000,000Worse-case equity grant, i.e. when using valuation ceiling0.57%
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FLOORv = valuation floor (to protect existing shareholders from giving away too much)$2,000,000Best-case equity grant, i.e. when using valuation floor1.43%
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How-to:
- Change values in Column B above to experiment with equity v cash scenarios
- Use 0 for valuation floor/ceiling when they are not applicable
- Equity grant usually subject to vesting and other conditions set out in the contract agreement
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License
Creative Commons Attribution-ShareAlike 4.0 International License
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Detailed instructions Chen's Blog Post
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