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Ultimate Venture Capital: How to model investment rounds
Rating: 4.1 out of 5(1,083 ratings)
6,861 students

Ultimate Venture Capital: How to model investment rounds

The #1 course that will help you land a job in VC, be a better startup founder, angel investor and financial analyst.
Created byKiley Grant
Last updated 11/2019
English
English [Auto],

What you'll learn

  • Build a Cap Table and Waterfall Analysis from scratch
  • Learn the actual numbers behind investment terms
  • Know the direct impact on ownership percentages of every major term sheet provision
  • Build Private Equity and Venture Capital Investment Models From Scratch
  • Have solid PE/VC acumen
  • Pass private equity Interviews
  • Pass venture capital interviews
  • Understand how valuation impacts ownership
  • Calculate potential payout after multiple investment rounds
  • Learn about different types of investment structures
  • Learn how to structure and modify a cap table
  • Learn how to calculate proceeds from the sale of a business.

Course content

3 sections • 50 lectures • 4h 22m total length

  • Basic Share Distribution3:12

    This is the first video in the series and where we begin to make the cap (aka capitalization) table. A cap table is where companies keep track of their ownership and who owns what. Setting up a cap table properly allows the finance team to forecast how much dilution the current owners will take when future capital is raised. The template I set up in this course is a commonly used way to build a cap table and essential if you are a startup founder, investor PE/VC analyst or just interested in finance.

  • Structure and Share Price Calcs10:29

    In this video we begin to format the cap table properly and I show you how I generally format the excel file so that is easy to follow and expand upon. I show you how I label each column and general terminology associated with cap tables and round modelling.

  • Adding in the Option Pool2:59

    We are going to add the option pool into the cap table in this video. This is often done incorrectly and in doing so can make the share price incorrect or just break the model. Fully diluted ownership is what comes into play here when adding the option pool shares into the mix.


  • Valuation Checks0:48

    This video is just a quick run through of the formulas and formatting created in the previous three videos to make sure everything is working correctly.

  • What if There is a Convertible Note?3:46

    Learn to model convertible debt in venture rounds, including discount, time, interest, and valuation cap, and how conversion uses the lesser of discount or cap.

  • Formula Review0:49

    Review the different methods of convertible note conversion, examine the spreadsheet formulas, and troubleshoot using the displayed share examples.

  • Methods of Convertible Note Conversion10:02

    Explore three convertible note conversion methods—pre money, percentage ownership, and dollars invested—and how post money valuation and principal and interest affect the outcome.

  • Methods of Convertible Note Conversion pt. 24:54

    Explore how different post money calculations affect founder ownership in convertible note conversions, including post money founder percentage, option pool impact, and resulting share prices.

  • Observations on Conversion Methods0:48

    Clarify how rounding can lower the share price when a convertible note's discount is applied, affecting the post-money valuation.

  • Valuation Cap Calculations4:45
  • Adding Logic to the Cap Table7:56

    Learn to model convertible note shares in a cap table using excel logic, including valuation cap and pre-money valuation, and compare different conversion methods to determine ownership.

  • Adding Logic to the Cap Table pt. 28:03
  • Calculation Check2:03
  • Formula Review1:10

    Review the key formulas on the page, pause to catch up, and confirm that everyone is on the same page as we zoom out and walk through the material.

  • Eccentricities of Convertible Notes7:22

    Explore how to calculate post money shares with convertible debt, determine liquidation preference, and model the waterfall analysis using the series seed price, option pool, and investor shares.

  • How to Add a Series A3:53

    Update the cap table for series A by switching from series seed and adding columns. Evaluate post-money ownership, option pool, investor shares, liquidation preference, and participating rights.

  • Series A Share Price6:15

    Compute series A share price by applying post-money valuation to invested funds, determine ownership and total shares, then calculate price per share (about $6.68).

  • Fully Diluted Percentages2:30

    Calculate fully diluted percentages to ensure the option pool equals 15 percent of the post money value, preserving series ABC ownership at 16.67 percent and preventing dilution.

  • How to Manipulate Hard Coded Cells2:02

    Check and validate the cap table model by manipulating hard coded cells to verify fully diluted ownership, ensuring the series avc equals ownership, and that 15 percent remains constant.

  • Pre-Money and Post-Money1:09

    Explore pre-money and post-money concepts and learn how post-money valuation is calculated by multiplying the series a share price by total shares outstanding, noting the impact of a new round.

  • How to Add a Series B6:48
  • Refining Option Pool Calcs1:45

    Set the post money option pool to 15 percent, insert series b options row, and ensure zero spec to avoid errors while computing remaining optional shares to verify 15 percent.

  • Fixing Errors1:03

    Implement a simple if statement to allow zero money valuations and prevent errors, ensuring the share price reference updates for series B.

  • Fixing Erros pt. 22:44

    Resolve divide-by-zero errors in a venture capital model by adjusting zero handling for share price, amount invested, and the post money option pool, including Series B scenarios, in real-time troubleshooting.

  • What if Investors Follow On?2:34

    Discover how a lead investor follows on into the next round, then adjust share counts, ownership, and 15% option pool with valuation and share-price calculations.

  • Alternate Way to Calculate Convertible Note3:13

    Learn an alternate method to calculate convertible note interest using daily rate and days, with new columns for amount, rate, time, discount, interest per day, and total interest.

  • Formula Review1:14
  • Cap Table Section Outro0:53

Requirements

  • You should be able to use Excel at a beginner to moderate level
  • Know some basic investment terminology

Description

What I have learned over the years is that most people, from startup founders to investors don't understand the cap table, and consequently their ownership, on a deep level.

Most founders lack the knowledge to model out future rounds and don't grasp key economic terms when negotiating their term sheet. This course will change that.

Most investors don't know how the waterfall will work in a liquidity event and what the liquidation preference really means to their overall return.

So, I created this course to teach the breadth of professionals involved in early stage capital how this all really works. It is exhaustive and touches on every key point I know that is economic to a deal. Learning how to plan and understand the ownership of your company is critical to keeping motivation and maximizing returns.

The course is taught through excel. It is hands on, get dirty, struggle to understand until the lightbulb goes off and you get it right. I teach it the exact way that i learn, which is by doing. It is step by step with commentary on the specifics.

What it is not, however, is a course in excel. While their are not overly complicated functions involved, you should have a base knowledge or you will get frustrated.

The value of this course is what it will save you in attorney's fees, equity, and potentially greater returns on your investments.You can learn how to project and manage your growth and join a community of people going through the same struggles.

Who this course is for:

  • Angel Investors, Startup Founders, Analysts, CFOs and Business Owners

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