With this tool, you get to see the real life consequences of investment terms before you sign the term sheet. Use it to better prepare yourself for negotiations with investors.
The numbers might differ slightly from spreadsheet models, because the precision and rounding of every system is different. The algorithm has been developed and tested for several months. However, Ledgy does not take any liability for the accuracy of these calculations.
Here’s an example
You and your co-founder have a startup, with equally split ownership, and an existing seed investment of 500k for 10% from a Seed investor. Then, a Series A investor offers you a pre-money valuation of 10m, with a 2m investment, and demands you create a 10% employee pool before the capital injection.
What does that actually mean in terms of ownership? Will you, as a founder, get diluted more than you anticipated? What is the actual impact of the Series A investor’s terms?
In the video below you can see the difference in the ownership distribution that “small” words can make. Pay attention to the pre- vs. post-money button and the toggle determining who gets diluted with the introduction of employee pool shares.
You may have noticed that there is another toggle that determines who is diluted if there are convertible notes involved. Try to calculate the difference if the Seed investor’s 500k was actually a convertible note with a 8m cap.
Let us know if you find this tool useful or if we can improve the experience in any way!