Founders Pie Calculator

Learn to use a simple framework and my robust calculator to help you and your cofounders to find a fair equity split.

Last updated 2022-01-10 | 4.5

- Use systematic and fair approach to dividing company equity
- Understand the two different frameworks for splitting equity
- Use custom built calculators to arrive at fair splits

What you'll learn

Use systematic and fair approach to dividing company equity

Understand the two different frameworks for splitting equity

Use custom built calculators to arrive at fair splits

Understand the key factors in initial equity consideration

How to use milestones and actual contributions to calculate a founder's equity

Learn which framework is better suited for your situation

* Requirements

* Microsoft Excel 2013+
* Understanding of basic algebra and percentages

Description

Kristen Barker - 5 Stars

“Clear and understandable. Excellent, useful excel templates. I appreciated the optional modules that clarified terms as well as more advanced information.”

Dan Heffley - 5 Stars

“Clear, concise, excellent pacing, with great examples, and numerous other resources.”

Noelima Salama - 5 Stars

“Good presentation and message transmission. Factors in those who already have the knowledge and those who don’t.”

Who is the Startup Equity Calculator for?

• New business owners

• Startup founders

• Co-founders

• Entrepreneurs

So, you have a great business idea.

You grab your two best friends, get all excited, and then start a company together.

In your haste to get started, you and your two cofounders decided to divide the equity evenly in thirds--it seemed the obvious and fair choice at the time.

Two months later, just as you're starting to get some traction, one of your friends changes his mind and drops out entirely. But for the work that he did initially, he believes he should still get to keep his 1/3 share of the company.

The two of you left are now essentially doing all the work, but for only 2/3 of the company. Still worth pursuing? Maybe. But you definitely won't be happy.

'Deadweight' cofounders with significant equity stakes can make it difficult to attract new team members or investors, among other issues.

Don't make this easily avoidable mistake. My course and my calculator will allow you and your cofounders to have a collaborative and transparent conversation about how much of the company each person should get.

_____________________________________________

Juan Campos - 5 Stars

“The resource materials are worth the course ALONE. On top of that, everything is explained clearly and with very good examples. You end up not only owning the knowledge, but also having the toolkit to act upon it.”

Guarav Bansal - 5 Stars

“Excellent course and explained in a very simple manner. Perfect use of text, side-video, traversing the excel workbooks, etc.

The excel workbooks are extremely helpful for understanding the concepts and for ready plug n play.

Thanks!”

Look, starting a new venture is hard, but having to figure out what is fair for each cofounder shouldn't be.

By taking this course and utilizing my easy-to-use Startup Equity Calculator (UPDATED to handle up to 7 cofounder slots--more than what 99.99% of you will need), you'll learn how to avoid this unfortunate, yet totally avoidable, situation.

You and your team might even have fun with the pie slicing exercise!

Through this course, you'll learn what you should factor into your equity pie considerations and how to use a systematic approach for calculating each founder’s fair share, both collaboratively and openly.

While this course isn't intended to provide you with the "correct solution,” it will give you and your team a great starting point to move your important conversation forward.

More importantly, it'll make it easier and less awkward to talk about who should get how much and why.

Deciding and agreeing on how to divide the initial equity pie is no trivial task, but this tool will help get the conversation going on the right path by forcing you and your cofounders to decide on what are the key milestones for your venture and how each of you are going to be making your contributions.

What if your starting a more traditional business?

Whether you're going for a high-growth type of startup or a more traditional startup with known benchmarks for revenue and cash flow, I've got you covered.

I'll explain to you which of the two frameworks and tools you should use depending on the type of venture you're starting up.

Feel free to take a look at the preview lectures to check out the calculators in action, and you'll see how they can help you and your cofounders have a smart equity conversation.

Good luck and happy slicing!

~Symon

Who this course is for:

startup founders
co-founders
entrepreneurs
new business owners

Course content

7 sections • 48 lectures

Too Long Didn't Watch! 4 lectures

A few things before we begin Preview 01:07

Bear with Me Preview 00:53

Quick message for students

TLDW (Too Long Didn't Watch!) - Course Summary in 1 Lecture Preview 08:29

This is the TLDW (Too Long Didn't Watch) Summary Lecture.

How to Raise Venture Capital for Your Startup - Interview Preview 00:25

Interested in getting a fresh perspective on VC fundraising and how that has/will change in the new normal?

In a wide-ranging interview, I ask Warren Shaeffer, founder of Knowable, to demystifies the startup fundraising process and shares his key takeaways for aspiring founders, including:

The fundamentals of fundraising
The best way to meet investors
The difference between angels and VC’s
What investors care about most
How to raise in today’s climate
How to evaluate a term sheet

Warren Shaeffer has successfully raised millions from VCs for his startups, including a recent $3.75M seed round led by Andreessen Horowitz.

Why a Founder's Pie Calculator? 8 lectures

What This Course Will (& Will Not) Do For You Preview 01:01

What this course WILL and WILL NOT do for you.

Don't Divide by N Preview 01:43

Whatever you do, DON'T divide by N. It's almost certainly going to be the wrong approach for you and your team.

Course Objectives Preview 00:48

Course objectives

Why Are You Here? Preview 00:47

Where are you from? What kind of startup are you working on or will be working?

Keep This In Mind Preview 00:58

Founders Pie Calculator Overview Preview 03:38

The calculator in this course is inspired by an article by Frank Demmler, which you can find here:

https://www.andrew.cmu.edu/user/fd0n/35%20Founders'%20Pie%20Calculator.htm

For the model in this course, I've made some additions that allow it to take on more use cases.

Waterfall Framework Overview Preview 04:21

Introduction to the Waterfall Framework

Which Should You Use? Preview 01:37

Tech, venture funding, IPO, apps, etc...? Go with the Founder's Pie Calculator.

Traditional brick & mortar startup? Go with the Waterfall Framework.

Framework #1: Founders Pie Calculator Considerations 11 lectures

Considerations Overview Preview 00:43

Overview of the section.

The Value of an Idea Preview 03:25

Should the idea be worth something? How much? Find out.

Cash Preview 02:51

How to treat cash contributions.

Skills Preview 02:10

Discussion on skills for the founders pie calculator.

Other Things That COULD Be of Value Preview 01:07

A list of common contributions teams may want to consider as part of their equity pie slicing exercise.

Milestones Preview 01:38

Milestones and how they're used in the founders pie calculator.

Don't Use This for Vesting Preview 02:40

Discussion on vesting--don't use the calculator for that.

UPDATED: Founders Pie Calculators TWO VERSIONS Preview 00:05

Old version handles up to 5 cofounder slots.

New version can handle up to 7 cofounder slots, which you could use for things like setting aside employee pool, accounting for late co-founders/early key hirers, etc...

Founders Pie Calculator Model - How to Use It Preview 16:13

A quick walk through of the founder's pie calculator and how to use it.

Tech Startup Example #1 Preview 14:48

A walk through of the founder's pie calculator with a tech startup example involving 3 founders.

Tech Startup Example #2 Preview 09:10

A walk through of the founder's pie calculator with a tech startup example where we use two of the "cofounder" slots to track angel investors and a 1st hire instead.

Framework #2: Waterfall Model 5 lectures

Why Use The Waterfall Framework? Preview 01:23

If distributions of cash flows are expected and there's a need to reward sweat equity, then the waterfall is a great fit.

Waterfall Framework Model - DOWNLOAD Preview 00:04

Download the waterfall framework file, with all of the formulas. You will be using this for the rest of this section.

What is the Waterfall? Preview 11:52

Discussion on what is the waterfall and its components.

Waterfall Model - How to Use It Preview 12:05

Walk through of the waterfall model and how to use it.

Restaurant Example Using Waterfall Framework Preview 15:22

Restaurant example using waterfall framework.

EXTRA MATERIALS: Measures of Return to Understand the Waterfall 11 lectures

Measures of Return Quick Caveat Preview 02:20

The lectures in this section were originally geared towards real estate but the concepts apply to any business with cash flows out and cash flows in (i.e. traditional business startups).

Measures of Return Overview Preview 00:58

Quick overview of the topics to be covered in this section.

Discounted Cash Flow Preview 05:45

If you aren't comfortable with discounted cash flow, it'll be difficult to fully utilize the waterfall model.

Discount Rate Preview 02:50

Net Present Value Preview 07:43

The Net Present Value determines value of all future incoming and outgoing cash flows in today's dollars.

In this lecture you will learn about NPV and what this measure says about your project.

**Model Included

Internal Rate of Return Preview 02:42

The Internal Rate of Return measures and compares the efficiency of your investment taking into account the timing of the cash flows.

Internal Rate of Return Demo Preview 04:33

Demo with Excel to show IRR calculations and comparisons.

Cash Multiple Preview 02:06

The Cash Multiple measures and compares the magnitude of your investment without taking time into consideration.

Which to Use? Preview 06:12

Which measure do you use?

Which to Use Demo Preview 04:59

Demo showing use of IRR & Cash Multiple.

Measures of Return Summary Preview 07:57

Summary of this section.

EXTRA MATERIALS: Additional Waterfall Example & Explanation 7 lectures

Waterfall Optional Section Intro Preview 01:10

Watch this before you jump into the rest of the section.

Waterfall Example Overview Preview 08:31

Using the same scenario (a real estate investment) to evaluate and compare the results of 4 different waterfall scenarios.

DOWNLOAD the file here to follow along for the rest of this section.

Waterfall Example - No Waterfall Preview 04:30

Using the same example to compare the various waterfall structures, we explore what the returns for each party would look like in a no waterfall scenario.

Waterfall Example - 2 Tiers Preview 12:00

Using the same example to compare the various waterfall structures, we explore what the returns for each party would look like in a 2 tier waterfall scenario.

Waterfall Example - 3 Tiers Preview 09:31

Using the same example to compare the various waterfall structures, we explore what the returns for each party would look like in a 3 tier waterfall scenario.

Waterfall Example - 4 Tiers (catch up) Preview 08:05

Using the same example to compare the various waterfall structures, we explore what the returns for each party would look like in a 4 tier waterfall scenario that uses a catchup.

Waterfall Comparison Preview 06:30

Comparing the four waterfall scenarios shows that depending on what your role is and what your expectation for the overall venture return will be, the ideal waterfall could be different.