Startup Options Valuation Excel Model by Financing Stage
Originally published: 19/04/2017 14:42
Publication number: ELQ-90311-1
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Startup Options Valuation Excel Model by Financing Stage

A straightforward option excel valuation model illustrating the impact of each financing stage on startup options.

Hereafter, you will find a capital table startup options valuation model that was created to value options for an early-stage startup with illiquidity.

It should be extremely valuable for founders as it will allow them (as well as their employees) to analyse equity compensation, or the options paid out, to founding team members and key employees.

You will find this model especially useful in employment negotiations.

This model is particularly designed in helping all team members of a startup understand what happens to their options at each fundraising round (ie: when there is a dilution effect). It can be really helpful to have a model that you can communicate to everyone in your organisation, as it shows that you are giving the same message to everyone on-board (including external consultants or people on the advisory board). It can also be helpful for founders looking for a co-founder or looking to hire a key employee.

As to illustrate what we call the "dilution effects", we have simulated a few investment rounds (business angels and VCs) along with the incrementation of employee options at different stages.

Special thanks to Raul Trevino, who worked closely with me to develop this options valuation financial model. Raul is a star forer Citi investment banker and Columbia MBA.

- David Teten & Raul Trevino

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