Fundraising Simulator

Model your funding rounds and understand the impact on your cap table and potential exit scenarios.

Initial Cap Table Setup

Fundraising Rounds

Live Cap Table Impact

Total Raised:

Ownership Evolution

Exit Scenario Modeling

See how different exit valuations affect the payout for each stakeholder.

Exit Parameters

Exit Valuation ($)

Liquidation Waterfall

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A Founder's Guide to Startup Fundraising

Navigating the world of startup fundraising can be daunting. From understanding complex terms to modeling your cap table, every decision has a long-term impact. This guide breaks down the core concepts to help you strategize your funding journey, from your first check to a successful exit. Use our simulator above to see these concepts in action.

The Early Stages: SAFEs

Understanding SAFEs (Simple Agreement for Future Equity)

A SAFE is the most common way for early-stage startups to raise money. It's a simple contract that allows an investor to give you cash now in exchange for the right to buy shares in a future priced funding round. It's popular because it's fast and defers the difficult conversation about valuation.

Valuation Cap: This is the maximum valuation at which the investor's money will convert into equity. A lower cap is better for the investor, as it guarantees them a larger percentage if your next round's valuation is high.
Discount: This gives the SAFE investor a discount on the share price compared to what later investors in the priced round will pay. It's a reward for taking an early risk.

The Priced Round: Selling Equity

What is a Priced (Equity) Round?

Once your startup has more traction, you'll raise a "priced round" (like a Seed or Series A). In this round, you and your new investors agree on a specific valuation for the company, which sets the price per share.

Pre-Money Valuation: This is the value of your company before the new investment comes in. A higher pre-money valuation means less dilution for the existing shareholders (you and your team).
Post-Money Valuation: This is simply the pre-money valuation plus the amount of new investment raised. The new investor's ownership is calculated as `Investment / Post-Money Valuation`.

Key Concepts Every Founder Must Know

Dilution: A Smaller Piece of a Bigger Pie

Dilution happens every time you issue new shares to investors or employees. Your ownership percentage goes down. While this sounds scary, it's a natural part of growing a venture-backed company. The goal is for the value of your smaller percentage to become far greater than the value of your original, larger percentage.

ESOP (Employee Stock Option Pool)

An ESOP is a block of shares you set aside to grant to future employees. Investors will require you to have one. It's crucial for attracting and retaining top talent. Note that creating or increasing an ESOP is dilutive to existing shareholders, and investors often negotiate for it to be created from the pre-money valuation, diluting founders and prior investors.

Liquidation Preference

This term defines who gets paid first in an exit. The standard, founder-friendly term is a "1x non-participating" preference. This means investors get the choice to either receive their original investment back or convert their shares to common stock and share in the proceeds alongside founders. Anything more than 1x or "participating" preferences can significantly reduce founder payouts in modest exits.

The End Game: Exit Scenarios

Modeling Your Exit

An "exit" is when your shareholders (including you) can sell their shares, typically through an acquisition (being bought by another company) or an IPO. The "liquidation waterfall" in our simulator shows how the proceeds from an exit are distributed. It's not as simple as everyone getting their ownership percentage. Due to terms like liquidation preferences, investors often get their money back first before the remaining proceeds are split among all shareholders. Modeling this is critical to understanding what you truly stand to make.