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Product Overview and Demo

I just posted a video which shows off our product.

Here’s the video with a transcript (there’s also closed captioning in YouTube):

Video Transcription

“Hi, this is Andrew with StartupSpot and I’m going to give you a quick tour of what we do.”

“We have educational resources, blog posts, and videos to help first time entrepreneurs and investors navigate the world of startup financing.”

“Let’s create an account on our web app. Select the Create Account button there, and then I’ll use Example McTesterstein as my display name, [email protected] as the email address, and some random secure password.”

“From here, clicking on the StartupSpot logo goes to the app’s home page where I can see recent activity in the system, my list of company profiles, and my list of financing scenarios.”

“I’ll create a new company profile, call it McTesterstein Inc. put it in the Broadcast Media industry. If I set a public email it both shows it on the company profile page and uses any Gravatar associated with that email throughout the web app.”

“Next I’m going to go to the cap table and create a couple of founders, Founder 1 will have 750,000 shares and Founder 2 will have 250,000 shares.”

“Then I’ll add a financing round. You can edit any items in blue inline in the cap table, I’ll change the name of the round to Seed and the date to September. You can also change the type of stock using that drop down menu.”

“To edit the nitty gritty details for the round, click the edit link which navigates to the round editing page.”

“Here you can edit the term sheet for the round, any section with ‘OR’s means there are multiple ways of expressing the same value, and you can pick which one best suits your needs. For example, you can change either the pre-money valuation, or the price per share, or the percentage of the company owned by round investors post equity.”

“Now I’ll add an investor for the Seed round, we’ll use Investor 1, and they will put in $250,000.”

“Next we’ll show an investor with convertible debt that converts into that Seed round. So we’ll create the convertible debt, then we’ll say that they put their money back in in March, select the investor, and in this particular case we’ll do Investor 2, and they put in $100,000 with a $5,000,000 valuation cap (5,000,000) and 8% interest.”

“We’ll have them converted to the Seed round on the date of the seed funding so that will be Sept 28th and at a 20% discount to the price.”

“Go back to the cap table and you can see the convertible debt now shows up on the cap table.”

“Everything I’ve shown so far is free for any company profile, for paid accounts you can also track option pools, warrants, and restricted stock, as well as the ability to see all the changes made to the company, who made them, where, and exactly what the change was. The subscription page will give you information on the company’s current subscription status.”

“The next feature I want to show is our most powerful, so we’ll go back to the home page and its the financing scenarios. So every account gets one for free, we’ll create My First Scenario.”

“And I’ll add an exit to it, set the date for the exit to be 18 months from the previous round of financing, and the amount of the exit to be a 50% increase from the previous round’s pre-money valuation.”

“You can also have the exit calculate the amount needed to get a return from an investment, all the investments for a round, or an investor by editing in the context of a company.”

“You can have liabilities, adjustments, fees, and carve outs, and you can change the payout schedule.”

“Now I’m going to apply this scenario to my company which will show me the cap table with the historical information shown as before and the scenario with the light blue background.”

“As you can see our scenario exit amount is 50% greater than the Seed pre-money valuation.”

“From here we can look at the waterfall view of the exit and see where the money is going and why, including the liquidation payout for the Seed round investors since they got participating preferred stock.”

“I’ll go back to the app’s home page to look at one of our example companies, SuperCorp, go into the cap table, and apply my scenario to this company as well. As you can see the exit is $30,000,000 in this case, 50% greater than the Series C valuation of $20,000,000. In many parts of our cap table you can get tooltips that show more details about what is going on.”

“To remove a scenario in this view, click on the X to the right of its name.”

“Now I will apply one of StartupSpot’s example scenarios, this one has a round of financing as well as an exit. And then I’ll apply our exit scenario as well, which will replace the example scenario’s exit with my scenario’s exit. Above the rounds and exits we show which scenario they belong to.”

“Now I’ll close the example scenario and we’re back to just the example company and my scenario there.”

“Finally I want to show you our settings page, you can get a link to Gravatar, to manage your Gravatar on our system. See how many scenarios you own and be able to buy more, change your password, and manage your email addresses. Thank you so much for watching this video. If you have any questions, get ahold of me at [email protected] Thank you.”

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Closed Captioning for our videos

I went through our previous videos and added the transcripts to YouTube, which then converted them into really nice closed captions. I’m really impressed with how easy it was, and thanks to Roy Leban of Puzzazz for letting me know about it.

Here is the YouTube playlist for the Startup Financing Basics.

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Option Pool Creation Video

My next screencast is on Option Pool Creation.

We’re posting these videos in our StartupSpot YouTube Channel, and below is the video with a transcript:

Video Transcription

“Hi, this is Andrew with StartupSpot and today’s topic is Option Pool Creation.”

“So there are two main ways of creating your option pool, the first is pre-money, and the second is post-money. Pre-money comes from the pre-money owners of the company, so if we have a three million dollar pre-money valuation and a three million dollar investment normally that is split 50/50 between the founders and investor.”

“But when you have a pre-money option pool creation the entire option pool is taken from the existing investors or the founders. So here the founder now get 40%, the investor 50 and the option pool is clearly comes out the founders. If this was done post-money, the dilution is shared between the two and each get 5% off, so 45, 45, and 10.”

“Let’s take a look at this in the screencast example I did before, with the pre-money valuation company. And what we’re going to do first is we’ll just change the name to something more generic, like screencast example. I’m also going to mark this as a public company which means that you can also go to this url.”

“So let’s put in a 10% option. And you’ll notice that if I make this post-money, the price per share is the same as it was before, one dollar per share. If I change it to pre-money, it now adjusts that price per share to a little over 88 cents. This it how it basically works, is it adjusts the price per share to bump up the investors shares to the correct percentage.”

“If you have any questions, comments, or requests for topics let us know at StartupSpot.com, you can email me directly at [email protected], or my twitter which is @myShoggoth. Thank you.”

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Pre-Money Valuation Explanation in Video Form

Last week I tried something new – I made a screencast to explain pre-money valuation. Not the most difficult of subjects, which was good because it still took a lot of time to come up with something I didn’t mind having others look at.

I’ve already received some great feedback and I’d love more. I will do more of these screencasts, and they should get better each time.

We’re posting these videos in our StartupSpot YouTube Channel, and below is the video with a transcript:

Video Transcription

“Hello, this is Andrew with StartupSpot and I’m going to explain Pre-Money Valuation.”

“The Pre-Money Valuation for a company is the value before a round of investment. So what is the complete value of that company at that time before the money from the investor comes in.”

“In this case we have three million dollar pre-money valuation, then the investor puts in two million dollars. The split is that the founders or anybody that had ownership of the company before the investment is sixty percent and the investors then taking forty percent of the company.”

“If we change this to two million dollars with a two million dollar investment, its fifty fifty.”

“You can play around with these numbers and see what would happen with different investment levels and different pre-money valuations.”

“To look at it a different way, first I’m going to create a company profile for this. Just change the name to Pre-Money Valuation Example, leave the rest of it blank. And let’s go to the cap table.”

“We’re going to create two founder investors, and generically name them Founder 1 with 750,000 shares, and Founder 2 with 250,000 shares. That makes the math work out really nicely, since there’s a total of one million shares pre-money.”

“Next we’re going to add a Seed Round, a Seed Round is usually the first round of investment, either friends and family or angel investors or a combination of the two.”

“Gonna change this to convertible preferred, which we’ll cover in a later screencast.”

“And add an investor with 200,000 dollars, since the price per share is one dollar, because the pre-money valuation is one million dollars and there’s one million shares, that means that one million divided by one million is one dollar per share.”

“So, two hundred thousand dollars will get you two hundred thousand shares. The post-money valuation then is one point two million, that’s the one million pre-money plus the investment of two hundred thousand, so one million two hundred thousand dollars.”

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