Valuation & Post-Money Math
The difference between pre-money and post-money is not just addition; it dictates who absorbs the option pool creation. Know the "option pool shuffle".
Launch CalculatorThe math behind the term sheet.
Venture capital is not just capital; it is a highly structured financial instrument. We document the unvarnished mechanics of liquidation preferences, cap table dilution, and fund-level waterfall returns.
Institutional Resource
15+ Reference Guides
11 Interactive Calculators
Zero PR fluff.
The Power Law Dictates Everything
Most venture coverage focuses on the narrative of the founder. But the legal and economic terms are dictated entirely by the GP's need to return a 3x net DPI to their LPs in a world where ~65% of deals return less than 1x capital.
Understanding this math is the only way to negotiate effectively.
The Baseline Reality
- Target Fund Return: 3.0x Net DPI
- Standard Carry: 20% (w/ catch-up)
- Standard Management Fee: 2% / yr (active)
- Avg Series A Dilution: 20-25%
Deal Mechanics
View allLiquidation Preferences
1x Non-Participating vs 2x Participating with a cap. When the exit is mediocre, this clause determines if common shareholders get zero.
Model PayoutsAnti-Dilution Provisions
Broad-based weighted average vs. full ratchet. How down-rounds destroy common stock equity through conversion price adjustments.
Calculate Ratchet
Fund Economics
The J-Curve & LP Dynamics
Founders think GPs are masters of the universe. GPs know they are fiduciaries chained to an LPA. Understand capital calls, European vs. American waterfall structures, and why a GP might force a premature exit to secure their IRR.
Read the Fund GuideInteractive Models
View all 11Stop using opaque spreadsheets. Our calculators are built in-browser, state assumptions clearly, and provide exact mathematical breakdowns.
Founder Dilution Calc
Track ownership across multiple rounds including option pool expansions.
Carry & Catch-up
Model GP payouts using an 8% hurdle rate and 100% GP catch-up tier.
SAFE Conversion
Compare Pre-Money vs Post-Money SAFE dilution at the priced round.
Fee & Recycling
Calculate total fee drag on a 10-year fund and the impact of fee recycling.
IRR Manipulation
Model how delaying capital calls boosts IRR using credit facilities.
DPI & TVPI Metrics
Evaluate paper gains against true distributed cash-on-cash returns.
Capital Call Schedule
Model LP uncalled capital liabilities across the 10-year fund lifecycle.
Option Pool Math
Calculate the true pre-money valuation drag caused by pool creation.
The Mathematics of the Exit
A $100M exit sounds successful. But if the company raised $60M with a 1x participating preferred structure and an 8% compounding dividend, the founder might walk away with less than $5M.
We break down standard term sheets clause by clause.
Analyze Waterfall StructuresExit Distribution (Hypothetical $100M)
Series B (Participating)
$42,000,000
Series A (Non-Part)
$20,000,000
Option Pool (Employees)
$18,000,000
Founders (Common)
$20,000,000
Why This Exists
The venture capital industry runs on narratives, but returns are generated entirely by math. This institute documents the unvarnished mechanics of how these financial instruments function.
Read MethodologyThe Problem with VC Content
Most content falls into two categories: law firm genericism that defines terms but refuses to show the aggressive math (to avoid alienating GP clients), or founder cheerleading that frames fundraising as a validation milestone rather than the sale of a restrictive financial asset.
Our Objective Stance
We analyze terms strictly from an economic perspective. A 3x participating preference is not inherently "founder-unfriendly"—it is simply a lever a GP pulls to protect downside risk. We model it objectively using standard NVCA terms and real-world math.
Data Sources & Assumptions
Our calculators are based on standard NVCA model documents, aggregate historical data (e.g., standard 20% carry, 2% fees), and typical cap table software logic. No LLMs were used to generate definitions; every mathematical model is hand-coded.
Frequently Misunderstood Concepts
What is the "Option Pool Shuffle"?
Investors require the option pool to be expanded *pre-money* to ensure they don't take the dilution hit for future employee grants. This effectively lowers the true pre-money valuation of the company by forcing the founders to pay for the entire future employee pool upfront.
Why do LPs care about DPI over IRR?
IRR (Internal Rate of Return) can be manipulated using subscription lines of credit (capital call facilities) that delay when LP cash is actually drawn. DPI (Distributions to Paid-In Capital) measures actual cash returned to the LP's bank account. You can't eat IRR.
Is a Post-Money SAFE better for founders?
No. A Post-Money SAFE provides certainty to the investor by locking in their ownership percentage regardless of how many other notes you issue. The founder takes 100% of the dilution from the "SAFE stack".
What triggers a Key Person clause?
LPs invest in specific humans. If the primary GP leaves or becomes incapacitated, the LPA usually suspends the fund's investment period, meaning the firm legally cannot write new checks until LPs vote to resume.