The Startup Equity Calculator from Udemy

Instructor Symon He hosts near daily LIVE office hours on TikTok 10:30PM PDT. Find him @SymonHe.

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 thirdsit 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 slotsmore 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

What's inside

Learning objectives

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

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

Syllabus

If You Have Time to Watch Only 1 Lecture

A few things before we begin

Quick message for students

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

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 it'll help you to divide the equity pie in a fair and smart way.

What this course WILL and WILL NOT do for you.

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

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

Keep This In Mind

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.

Introduction to the Waterfall Framework

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

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

If you're doing a tech, high growth startup, use this framework.

Overview of the section.

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

How to treat cash contributions.

Discussion on skills for the founders pie calculator.

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

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

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

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...

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

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

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.

If you're doing a more traditional business startup or venture, use this framework.

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

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

Discussion on what is the waterfall and its components.

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

Restaurant example using waterfall framework.

Help You Better Understand Use of Waterfall

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).

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

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

Discount Rate

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

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

Demo with Excel to show IRR calculations and comparisons.

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

Which measure do you use?

Demo showing use of IRR & Cash Multiple.

Summary of this section.

More discussion on the Waterfall framework.

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

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.

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.

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.

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.

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.

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.

For new students of Udemy

Udemy Technical Error: Filenames Download as "Original"

Overview of some useful Udemy features like speeding up lectures, bookmarking, downloading files, and how to to ask questions to the Q&A forum.

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Teaches quantifiable methods for determing founders' shares, which is common in startup settings

Covers various startup structures, including high-growth and traditional brick-and-mortar

Provides an interactive walkthrough of custom-built calculators, which helps students understand the concepts

Uses a systematic approach to dividing equity, which fosters fairness and transparency

Provides a framework for considering key factors in equity allocation

Emphasizes the importance of communication and collaboration in equity discussions

Reviews summary

Good course with minor video issues

According to students, The Startup Equity Calculator is a good course with engaging content. Students do mention that the videos in the course are sometimes out of focus, but overall this course is highly rated.

Students largely approve of this course.

"I like the content presentation"

"I highly recommend this course"

Some videos in the course have focus issues.

"the video is out of focus at times"

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in The Startup Equity Calculator with these activities:

Review Key Corporate Finance Concepts

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Refresh your knowledge of foundational corporate finance concepts before starting the course.

Browse courses on Corporate Finance

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Go through your notes from previous finance courses.
Review online resources or textbooks to cover key concepts.
Take practice quizzes or tests to assess your understanding.

Review of Corporate Finance by Richard Brealey, Stewart Myers, and Alan Marcus

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Review the core principles of corporate finance to strengthen your understanding of the concepts covered in the course.

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Read the assigned chapters.
Take notes on the key concepts.
Complete the practice problems at the end of each chapter.
Discuss the concepts with a study group or tutor.

Form a Study Group

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Collaborate with peers to enhance learning through discussions and knowledge sharing.

Browse courses on Corporate Finance

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Identify a group of motivated peers.
Establish regular meeting times.
Set goals for each study session.
Take turns presenting concepts to the group.

Five other activities

Expand to see all activities and additional details

Show all eight activities

Practice Corporate Finance Calculations

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Reinforce your grasp of corporate finance formulas and calculations through regular practice.

Browse courses on Corporate Finance

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Gather practice questions from textbooks or online resources.
Set aside dedicated time for practicing calculations.
Solve practice questions independently.
Check your answers and identify areas for improvement.

Join a MOOC on Corporate Finance

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Supplement your learning with a structured online course to enhance your understanding of corporate finance concepts.

Browse courses on Corporate Finance

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Enroll in a reputable MOOC platform.
Choose a course that aligns with your learning goals.
Complete the course modules and assignments.
Engage in discussion forums to connect with peers.

Contribute to an Open-Source Corporate Finance Project

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Enhance your understanding by contributing to a real-world corporate finance project.

Browse courses on Corporate Finance

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Identify an open-source project related to corporate finance.
Review the project documentation and codebase.
Identify an area where you can contribute.
Make a pull request with your proposed changes.

Conduct an Industry Analysis

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Apply corporate finance principles to analyze an industry and identify investment opportunities.

Browse courses on Corporate Finance

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Choose an industry of interest.
Gather data on industry trends, competition, and financial performance.
Analyze the data to identify key drivers of industry performance.
Develop a financial model to forecast industry growth and profitability.

Participate in a Corporate Finance Case Competition

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Test your understanding of corporate finance concepts by participating in a case competition.

Browse courses on Corporate Finance

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Identify a relevant case competition.
Form a team with complementary skills.
Analyze the case and develop a solution.
Present your solution to a panel of judges.

Career center

Learners who complete The Startup Equity Calculator will develop knowledge and skills that may be useful to these careers:

Entrepreneur

Entrepreneurs are responsible for starting and running their own businesses. They identify opportunities, develop business plans, and raise capital. This course can help entrepreneurs build a foundation in equity and valuation, which are essential skills for starting and running a successful business. Additionally, the course can help entrepreneurs understand the different types of equity structures and how to negotiate equity with investors.

See salaries and explore the career path for Entrepreneur

Financial Analyst

Financial analysts help businesses make investment decisions. They analyze financial data and make recommendations on how to allocate funds. This course can help financial analysts develop their skills in equity valuation and analysis, which are essential for making sound investment decisions. Additionally, the course helps analysts understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Financial Analyst

Venture Capitalist

Venture capitalists invest in early-stage companies and help them grow. They analyze financial data and make recommendations on how to allocate funds. This course can help venture capitalists develop their skills in equity valuation and analysis, which are essential for making sound investment decisions. Additionally, the course helps venture capitalists understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Venture Capitalist

Private Equity Investor

Private equity investors invest in private companies and help them grow. They analyze financial data and make recommendations on how to allocate funds. This course can help private equity investors develop their skills in equity valuation and analysis, which are essential for making sound investment decisions. Additionally, the course helps investors understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Private Equity Investor

Investment Banker

Investment bankers help companies raise capital and advise them on mergers and acquisitions. They analyze financial data and make recommendations on how to structure deals. This course can help investment bankers develop their skills in equity valuation and analysis, which are essential for structuring and executing successful deals. Additionally, the course helps investment bankers understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Investment Banker

Chief Financial Officer

Chief financial officers (CFOs) are responsible for the financial health of a company. They oversee financial planning, budgeting, and accounting. This course can help CFOs develop their skills in equity valuation and analysis, which are essential for making sound financial decisions. Additionally, the course helps CFOs understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Chief Financial Officer

Chief Operating Officer

Chief operating officers (COOs) are responsible for the day-to-day operations of a company. They oversee production, marketing, and sales. This course can help COOs develop their skills in equity valuation and analysis, which are essential for making sound operational decisions. Additionally, the course helps COOs understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Chief Operating Officer

Chief Executive Officer

Chief executive officers (CEOs) are responsible for the overall success of a company. They set the company's vision and strategy and oversee all aspects of its operations. This course can help CEOs develop their skills in equity valuation and analysis, which are essential for making sound strategic decisions. Additionally, the course can be particularly useful for CEO's looking to make acquisitions or mergers/consolidate.

See salaries and explore the career path for Chief Executive Officer

Accountant

Accountants prepare and maintain financial records for businesses. They also help businesses comply with tax laws. This course can help accountants develop their skills in equity valuation and analysis, which are essential for preparing accurate financial statements. Additionally, the course helps accountants understand the different types of equity structures and how to use them to minimize taxes.

See salaries and explore the career path for Accountant

Consultant

Consultants help businesses improve their performance. They analyze data and make recommendations on how to improve efficiency and profitability. This course can help consultants develop their skills in equity valuation and analysis, which are essential for making sound business decisions. Additionally, the course helps consultants understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Consultant

Investment Manager

Investment managers help individuals and families invest their money. They make investment decisions and manage portfolios. This course can help investment managers develop their skills in equity valuation and analysis, which are essential for making sound investment decisions. Additionally, the course helps investment managers understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Investment Manager

Data Analyst

Data analysts help businesses collect, analyze, and interpret data. They use data to identify trends and patterns and make recommendations on how to improve business decisions. This course can help data analysts develop their skills in equity valuation and analysis, which are essential for making sound data-driven decisions. Additionally, the course helps data analysts understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Data Analyst

Business Analyst

Business analysts help businesses identify and solve problems. They analyze data and make recommendations on how to improve efficiency and profitability. This course can help business analysts develop their skills in equity valuation and analysis, which are essential for making sound business decisions. Additionally, the course helps business analysts understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Business Analyst

Portfolio Manager

Portfolio managers help individuals and families invest their money. They make investment decisions and manage portfolios. This course can help portfolio managers develop their skills in equity valuation and analysis, which are essential for making sound investment decisions. Additionally, the course helps portfolio managers understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Portfolio Manager

Financial Planner

Financial planners help individuals and families manage their finances. They provide advice on investments, retirement planning, and estate planning. This course can help financial planners develop their skills in equity valuation and analysis, which are essential for making sound investment recommendations. Additionally, the course helps financial planners understand the different types of equity structures and how to use them to maximize returns.

See salaries and explore the career path for Financial Planner