Correction: In the spreadsheet graphics, the Notes have a 20% discount (not 10% as written). Join Feel the Boot for access to one-on-one coaching with me: ftb.bz/Join Follow us on LinkedIn ftb.bz/LinkedIn or Twitter ftb.bz/Twitter
Great stuff, like it a lot! Two questions: 1) You say 20% discount on the notes but the visualizations say 10%. Seems 20% makes sense but just checking. 2) How do you reach the 200,000 shares in the Capped Down Round-example? P
That is an error. The numbers reflect 20% but the row title says 10%. I probably was switching back and forth as I developed the content and failed to fix that. I have updated the version in the blog.
Great question. Investor dilution alongside the founders is how it usually works. Once they have shares, they are impacted by the company issuing new shares in exactly the same way as the founders and everyone else. Some investors will ask for "anti-dilution" provisions. Founders should push back hard on that. In a down round, it could cost them most of the company.
@@FeeltheBoot thank you for answering. The number of shares remain the same through each round. So the value of the shares is increasing but the equity % is decreasing. When do investors actually get paid because the business is too small to pay dividends.
@@chichi0000 the investors make money when the company is acquired by a larger company, or goes public with an IPO. At that point they can sell their shares which should be worth far more than they paid. Typically, investors have to wait 7-10 years before they see anything.
