Hello all,
I am trying to understand the terms for a project (but being new and dipped in folly am unable to get it)
Fundraise history for an early stage start up as follows:
May 2013: $1mn seed round at $3mn pre money Jan 2015: $700k round as convertible note at $10mn pre money cap and 20 percent discount
Jan 2019: Start up now looking to raise $3mn at $15mn pre money valuation.
My doubts: To analyze this, does the Jan 2019 15mn pre money valuation include also the convertible debt? How does it work? What will be the final cap table? I don't understand how to calculate this without knowing the amount of shares outstanding...
Depends on what the terms say about who will be dilluted by the conversion of the debt into equity.
Also depends on whether the 2013 investors already converted at the 10mn valuation during the 2015 raise.
Check out this overview from Cooley: https://www.cooleygo.com/calculating-share-price-outstanding-convertibl…
Unrelated, but round sizes have ballooned in the past couple years (and pre-seed rounds have basically become what seed rounds used to be), so this is like an avg/smallish seed raise. Might rethink round naming.
Good luck
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