Fundraising Simulator
Model how SAFEs and priced rounds change your cap table, founder ownership, and exit proceeds — before you sign the term sheet.
Initial Cap Table Setup
Fundraising Rounds
Live Cap Table Impact
Ownership Evolution
Exit Scenario Modeling
See how different exit valuations affect the payout for each stakeholder.
Exit Parameters
Liquidation Waterfall
Inputs & Outputs
What the simulator takes, what it returns.
- Initial founders & ownership (%) — starting cap table before any fundraising.
- SAFE rounds — Investment, Valuation Cap, Discount Rate (%), New ESOP Added (%). Converts on the next priced round.
- Equity (priced) rounds — Investment, Pre-Money Valuation, Liquidation Preference (e.g. 1x), New ESOP Added (%).
- Exit valuation (USD) — sets the scenario for the liquidation waterfall.
- Cap table evolution — ownership % per stakeholder after each round.
- Founder dilution — cumulative dilution across all rounds.
- Liquidation Waterfall — payout per stakeholder at the modeled exit, applying each round's configured liquidation preference.
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Check IncubatorMethodology
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.
FAQ
What does the funding simulator do?
It models how multiple funding rounds — SAFEs and priced rounds — affect your cap table, founder ownership, and exit proceeds. Set up your initial founders and ESOP, add the rounds you're planning, then simulate an exit valuation to see the liquidation waterfall.
What is a SAFE and when should I use one?
A SAFE (Simple Agreement for Future Equity) is a contract where an investor gives you cash now in exchange for the right to convert into equity at your next priced round. It's the dominant instrument for pre-seed and seed rounds because it's fast, cheap, and defers the valuation conversation. SAFEs typically include a valuation cap, a discount, or both.
What's the difference between pre-money and post-money valuation?
Pre-money is the value of your company before the new investment. Post-money is pre-money plus the new money raised. The new investor's ownership percentage is calculated as Investment / Post-Money Valuation. When someone says "we raised at a $10M valuation", ask whether they mean pre or post — it meaningfully changes dilution.
What is dilution and should I be worried about it?
Dilution is the reduction in your ownership percentage when new shares are issued to investors or employees. It's a natural part of venture-scale growth — the goal is for your smaller percentage of a much bigger company to be worth more than your previous, larger percentage of a smaller one. Dilution becomes a problem only if you raise too much at low valuations or take bad terms.
Why does my exit payout seem lower than my ownership percentage?
Liquidation preferences. Most preferred shares carry a 1x non-participating preference, meaning investors get their money back first, before remaining proceeds are split by ownership. If preferences are participating or multiples above 1x, investors get paid back and share in the upside, which compresses founder payouts — especially in modest exits. The simulator's liquidation waterfall shows exactly how this distributes.
What is an ESOP and how does it affect my dilution?
An ESOP (Employee Stock Option Pool) is a block of shares reserved for current and future employees. Investors require one for any priced round, typically 10–15% post-round. Critically, the pool is usually carved out of the pre-money valuation — which means founders, not investors, bear the dilution. This is negotiable.
What's a healthy LTV:CAC or dilution range per round?
Rule-of-thumb ranges: founders typically give up 15–25% per priced round (Seed, Series A, Series B). After three rounds plus ESOP, founders often hold 30–50% collectively. These are ranges, not rules — strong metrics and competitive rounds push it better, weaker fundamentals push it worse.
Does the simulator model convertible notes?
Not directly. SAFEs cover most early-stage conversions. If you have convertible notes with interest and maturity terms, model the expected conversion amount as the SAFE principal to approximate the dilution — though for a precise cap table with interest accrual, use your legal counsel's cap-table software.
Is this financial or legal advice?
No. The simulator is an education and planning tool. Every real round involves terms beyond what's modeled here — anti-dilution protection, pro-rata rights, board composition, information rights. Work with a startup-experienced lawyer before signing anything.
Is my data saved?
Yes, in your browser. Your cap-table setup, rounds, and exit scenario are stored locally via localStorage. Nothing is sent to our servers. Use Reset to defaults to clear it.