Felix on Startup Cap Tables: How to model a Seed Round with a convertible note

At Seedcamp, we are lucky to meet hundreds of founders a year who are solving some of the world’s most challenging problems. For many of these individuals, it is their first time raising capital for their startup and, often, we see the same cap table-related mistakes being made early on. These can equate to huge costs down the line as the startup grows. In an effort to help founders avoid making these mistakes early on, our associate Felix Martinez walks you through how to build a Captable throughout our last video of our series on Cap Tables.
In previous episodes of the series, Felix and Carlos covered the basics when modelling your cap table for an angel round, as well as your first VC-led equity round. They covered everything from pro-rata rights, different share types, voting rights, as well as how to build option pool expansions. For this last episode of Felix on Startup Cap Tables, Felix and Carlos walk us through a seed round raised via convertible note (also applicable to all other variable price structures like ASAs/SAFEs). You can follow along with them via the GSheet Cap Table Model linked in the show notes. In this episode, they cover:
Agenda:
00:00 Introduction & Agenda
05:12 Differences between Convertible Notes, SAFEs & ASAs
10:55 Seed round model set-up
15:29 Example of a conversion event for a Convertible Note
23:30 Stacked convertible notes and when they become toxic
26:27 Example of secondary transactions
30:30 Review of option pools
34:33 Pre- and post- money valuation caps
As always, leave comments below if you have questions, and feel free to email [e-mail].
Show notes:
Felix Martinez - felixjmartinez_
Carlos Espinal - cee
Seedcamp - seedcamp.com
GSheet Cap Table Model - Seed: docs.google.com/spreadsheets/d/1UIGhOiMbQZWt5aOg3FDmLL0cEgT5FCBLRDFhEmm_blQ/edit?usp=sharing
Legal Hour - • Legal Hours with Seedcamp
All previous episodes of Felix on Cap Tables - • Felix on Startup Cap T...
Carlos' book - The Fundraising Guide 2.0: fundraisingfieldguide.com/
Model Equity Calculator - seedcamp.com/resources/model-equity-calculator-for-founders-with-option-pool-expansion/)
Startup Valuation - cee.medium.com/how-does-an-early-stage-investor-value-your-startup-and-how-can-you-influence-it-for-the-better-d480b3b13e8e

[@RoshanIngole-hz2tl]

This is so amazing Felix & Carlos, really appreciate all the hard work gone behind preparing this. One great thing which I would like to mention is simplicity in explaining these complex terms.

[@BogdanCristei]

Thanks for putting this together, very helpful!

[@ShaneRogel]

Well done! Very informative. A great combination of theory and practice.

[@lospincheiras1]

This is great!!!