Example of new shares issued for investment and options pool in one round?


1

Please check my thinking.

  • Right now, founders own 100% of 1000 shares.
  • We're willing to sell 30% of the company to outside investors.
  • We want to set aside another 10% for an employee options pool.

I think this all means we need to issue 666 new shares, and put 500 up for sale, and put 166 in the options pool. Is this right?

Funding Shares

asked Aug 7 '11 at 23:16
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W. Matthew Wilson
104 points

1 Answer


2

If your investors have agreed 30% based on the post-money valuation, and a 10% post-money options pool, then your example is correct. Or, to be entirely accurate:

  • The investors would have 500/(1000+666) = 30.01%
  • The options pool 166/(1000+666) = 9.96%
  • All founders combined 1000/(1000+666) = 60.02%

(Percentage values rounded off to two decimals.)

However, this blindly assumes that you already have negotiated this result, or are in a position to actually negotiate this. There are other points that need to be settled, see for example the Venture Hacks article "The Option Pool Shuffle ". I assume you meant the question as a hypothetical example, just to see a basic math example of issuing new shares.

answered Aug 7 '11 at 23:34
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Jesper Mortensen
15,292 points

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Funding Shares