Decoding Equity And Convertible Notes - Startups 101

[@slidebean]

Last year, companies using our pitch decks raised $300M+ in venture capital. Here's how we can help you ►slidebean.com/?

[@lekantaiwo]

am trying to find a book you posted that has directories to american investors

[@lamaalzahrani984]

lekan taiwo is there any book like so? Please help

[@abdulsiyanbade2828]

unless I misunderstood this, I think there's a mistake at 12:00. I believe Gus should be 75,000 shares while Madigral would then be 21,500 shares. Great content though! Learned a lot here.

[@ahmedcine]

AbdulSiyanbade, I thought so, too. Excellent content, all the same.

[@optionstrader1939]

I’m a VC/IPO/M&A lawyer and was looking for some easy videos to explain startups, VC funding, etc. to my 18 year old daughter who is beginning business program at college. This video and this entire series is excellent. I also used to teach this stuff at MBA/Law school and explaining these things in a concise and easily understandable way is not all that easy. Great job to the Slidebean guys. And yes, as you mentioned in another video, what you have done with your company and technology is amazing even if you did not displace PowerPoint, etc. Congrats on your success and on eventually figuring who you really are and what your market is. Sadly, most tech entrepreneurs never make it that far.

[@slidebean]

Thanks! :)

[@techie2103]

@@slidebean hi can you explain about class a shares vs class b shares ?

[@tetroblanco3509]

How can I reach you if I have a possible Unicorn Startup

[@captainkip4624]

Man isn't that the truth. It took us 3 maybe 4 years to figure out who our customer was. This an excellent knowledge transfer throughout the series and highly recommend them. I also started playing with the app. There is a lot of potential here.

[@optionstrader1939]

@@tetroblanco3509 Hi. Sorry for delay in replying. I dont use KZbin all that much so I just saw this. Unfortunately I’m way too busy to help any more companies, but I appreciate you thinking of me.

[@fumbio2718]

This feels like a MBA class in 15 mins brilliant

[@cayahere]

Fumbi O funny thing is… I didn’t even study business.

[@ogorchukwuofili7319]

Tbh!

[@blanche1935]

Caya I am studying business, but honestly you don’t have to. Specially, when you have previous experiences of founding companies such as your case. In fact, your experiences in this channel are invaluable and it’s something that I have not acquired from any classes. So thanks a lot for the content! :)

[@ibukontraktor-taqwaproperty]

No it doesn't.

@@cayahere sir this channel is a damn gold mine of knowledge. I m not even 18 but damn this one and channels like economics explained makes me get into finance right away. Thanks a lot for such great videos

[@neftalemfikre8122]

what can i say; except to say ,thank you! I am a BDS consultant from Ethiopia (Africa). I thank God i found you, because you make what seem to be unnecessary complicated concept easy to understand not just for a BDS but to my clients who are startups and for Free. just wow. Please continue what you are doing. I share your videos on LinkedIn community in my network-making sure it reaches as many as possible. I love you guys :)

[@kishalayray7570]

You are the only one who is delivering these valuable contents on KZbin love and thanks from India

[@cayahere]

General Science 🙌🙌

[@tainadinapoli7993]

I so agree

[@soultanapapadopoulou2931]

I'm just stunned by the amount of information your video conveys, things that my four years Bachelor failed to explain in such a simplified and structured way.

[@chrisbaumann6850]

Great content Asma'a - apreciated! Just to correct 11:59: Walter/Jesse: 500.000;45.6% //Gus 75.000;6.84%//Madrigal 21.500;1.96%

[@Cornerstone4684]

Exactly! Great video and clear explanation but I repeated the maths and he need to correct so Gus: 6.8% & Madrigal: 2%

[@trg.moonchildmgk]

This is beyond wonderful. I actually understand this. I paid a lawyer to break this down and the lawyer didn't even know what they were looking at. This now helps me with making my decision on signing a contract or passing. Thank you so much.

[@ayanda1271]

A new world has been open to me on KZbin. The clarity is refreshing and is exactly on the subject I need at this stage of my start-up

[@BelindaAng]

The most effective explanation I've come across! Have subscribed! Looking forward to your view on vesting.

[@slidebean]

Thanks for subscribing, knowing that our content is being valuable to you guys makes our day!

[@cayahere]

Glad this helped. It was pretty insane that a clear explanation about these concepts was nowhere to be found.

[@awesomethings9712]

It was really very simple easy to understand. Anyways belinda ang are you in china

[@awesomethings9712]

Belinda Ang I am foreigner in china too

[@BelindaAng]

@@awesomethings9712 No, I'm from Singapore.

[@felix20111128]

Thanks for the video! Btw, the calculation at 12:00 seems to be wrong. Gus and Madrigal's data seem to be reverse. Let me know if I misunderstood it. Gus: 525K / 7M * 1M = 75,000 shares Madrigal: 1M / 50M * (1M + 75,000) = 21,500

[@ACE_77]

It's funny how much information this 15 min video has, really helpful, thank you and keep up the amazing work

[@slidebean]

🙌 thanks ACE!

[@infinite3397]

This is the best KZbin University has to offer around start ups. Your content and delivery keeps getting better and better. Much love and support from Chicago!

[@slidebean]

Thank you so much, Ninja! All the love back to you!

[@douglasocosta13]

This channel is making me fall deep in love with startups, more than I was alredy. Thank you very much for the excellent material!

[@gymnastmohamed5809]

Dude you’re the best mentor that i have never got, but seriously man that was the best explanation of equity that i have ever heard thanks!!!

[@kafeleboothe]

This is great! Though your math at 10:56 is off: 525k/4MM is 13.125% -- but assigning Gus 131.25k shares assumes there was 1MM shares to divy up, but they would've issued new stock for Gus. So he would've had 13.125% of the *new* total (incl. issued), so 151k shares, bringing the total to 1.151MM shares. This is a classic markup/margin calc error, a simple mistake (I didn't touch Madrigals calc, but I'm sure the above would change her numbers as well).

[@boudjemaanaitkaci8059]

Dude you’re channel is definitely the #1 for this matter and your speeches are the best. Keep it up.

[@slidebean]

Thanks!!

[@davetheman2615]

My man, you are a superb Educator!! All done in an Easy to understand way. These video's are simply brilliant, and a fantastic Aid to myself and i'm sure others who are embarking on a Tech start up journey, look forward to more video's

[@slidebean]

Thanks a lot!

[@dylandxothomas4132]

I've been trying to understand this for a looong time and finally, you laid it out in a way that very easy to understand Thank you brotha. I will definitely subscribe and share this content.

[@slidebean]

You're very welcome! Thanks for the sub!

[@stephenbruce5431]

Absolutely amazing explanation! Subscribed!🙌

[@slidebean]

Thanks for the sub!

[@andreajackson4764]

I cannot thank you enough for this comprehensive yet approachable lesson! I look forward to watching more of your videos 🙏🏾

[@mal1que]

Trying to understand Convertible Notes all this while, you just made it super easy for me!!!

[@cayahere]

Amazing! Glad it helped.

[@luiscader]

This was surprisingly one of the most accurate and easy to understand explanation of SAFEs and raising Financing. Amazing, well job! super impressed that you have this knowledge at a young age. Great job man!! Will definitely share and subscribe.💯

[@3519Marc]

Thank you , really enjoyed the presentation and was well worth watching. Note on the supercharged round you flipped the values for Gus and Mardrigols position. Gus with the 7 million cap should have a larger amount than Margo with her 1 million investment and 50 million valuation. please check it out thanks again for the video .

[@econgravy]

One of the best explanations of the topic ever and anywhere on the internet. Thank you. An instant subscribe hit.

[@slidebean]

Welcome aboard!

[@the.titilayo]

Never been this clear about a complicated topic before! Thanks for making assimilation easy.

[@youjustcalledmewhat]

I found this channel by accident and now I'm glad I did. What a gem

[@hosseinpro6379]

I watched many YC academy videos before, but your videos are more helpful since zip the most important notes in a short time.

[@EricMForte]

I can't THANK YOU enough for this amazing video. I have been in business 25 years, watched countless Shark Tank episodes, and have always been befuddled by what you just covered in 15 min. Well done!

[@slidebean]

Thanks Eric!

[@jackeasyapproval]

Great video. I'm starting up a new tech company and i was kind of confused on the vocabularies of investing. Now it is clearer to me thanks to this video. It helped me a lot. I wish you were in my team. Thanks a lot for the information. Great job.

[@slidebean]

You're welcome Oscar! Keep watching as we cover more and more information that'll help you become more familiar with the terms as we go :)

[@HS-wd5mp]

Excellent explanation. I’m an entrepreneur and this is exactly what I was looking for. Thank you.

[@chriscowboyfan]

the ease in which you explain- wow you really know this inside and out- subscribed ! i can you see you over taking that plain bagel !

[@slidebean]

Issuing a correction/clarification. There's an error on 10:58, the colors and percentages for Gus and Madrigal are inverted.

[@IdowuObadeyi]

Now I'm a lil confused. My understanding is that Gus converted at (525k/4million valuation * 1,000,000shares). So, if that's the case the chart is correct as is. What do you mean "inverted"?

[@fredericpette6483]

I would suggest that the error is not on 10:58 (the whole slide is fine there) but rather on 11:59: there, indeed, Gus should be credited with 75'000 shares and Madrigal with 21'500.

[@rahulhotchandani5639]

@@fredericpette6483 this is correct. The error is at 11:59. the graphic at 10:58 is correct.

[@rahulhotchandani5639]

@@fredericpette6483 Just one question though, 525k investment at 4M pre money should lead to equity of 11.6%, not 9.6%. Am I right?

[@fredericpette6483]

@@rahulhotchandani5639 You would be right if the capital increase would stop with Gus. However, it is the investment from Madrigal that triggers the convertible note, so you have to go through the capital increase with Madrigal to get the real (final) percentages, which are displayed on the pie chart. In this case (at 10:58), you divide 131'250 by 1'357'500 and get to the indicated 9.7% for Gus...

[@EdlyDestinedds]

This was one of the most informative videos I have ever watched on youtube! Thank you

[@Mykol225]

Great explanations and production value. Good job!

[@cayahere]

Thanks for watching Michael!

[@ndakigeorge8147]

Very eloquently delivered.. very much appreciated Slidebean

[@slidebean]

Thanks, ndaki!

[@dannylevy]

Impressed. I keep trying to explain this to friends. Glad to have found your video. Very well done. Especially the "Breaking Bad" touch. Loved it.

[@slidebean]

Awesome, thank you!

[@thecoachchris]

This is something I thought I'd learn day 1 of business school. I love KZbin because of content like this!

[@gibranmalik]

Never get an MBA. Let them collapse. God bless corona.

[@allencartwright2174]

This was amazing video! I've been looking for explanations on understanding start up funding when it come to these terms but there is nothing thanks a lot Slidebean!

[@cayahere]

Allen Cartwright thanks a lot for watching, glad it helped!

[@abdifataahify]

Great explanation and content. The perfect overview I needed before I start narrowing my research

[@slidebean]

Glad it was helpful!

[@jameskillen6372]

Finally!! That was the easiest explanation and tremendously helpful! Thank you! Subscribed!

[@benjaminalexofficialgmailc5679]

James Killen well that’s nice,do you have any idea of digital currency,it really profitable .since it’s at a high rate

[@razafazal7366]

Slidebran shud strt youtube mba 👍👍 Best content ever and such simplief explanations

[@pierooms1271]

Simplest explanation to this complex problem. Thanks buddy😊

[@slidebean]

Thank you for watching!

[@dmitriysolodukha9646]

Nice music. Actually almost no one explains how convertible notes work. I had to read lots of sources to get it. Thanks, man.

[@cayahere]

Great, glad it helped!

[@andormerks3834]

Yeah, I love the clarity and your friendliness ... not to mention the 'random' examples: Octopus Car Wash :D :D :D

[@atlegilemarketing]

Thanks so much for explaining + providing tools 🔧 @ the end there. This helps us understand the stocks much better as a StartUp in Africa 🌍 💛

[@spiderdog196]

Brilliant post. Just subscribed. Going to watch every video you guys have. Thank you so much for the time and effort putting it together. Invaluable resources

[@slidebean]

Thank you sooooo much for your feedback and subscription! Make sure you join Caya on Discord so you can ask him any questions you may have. Slidebean.com/Live

[@clarkmak714]

You absolute legend. This was great. I was doing this by reading articles and it was doing my head in. Thank you

[@slidebean]

You're very welcome :)

[@thezengineer554]

You are a top notch teacher. Thank you.

[@slidebean]

Wow, thank you!

[@MartinGlastetterJr]

Nice work, simply explained, very helpful. Cheers!!

[@slidebean]

Glad it helped!

[@jayadeepbhat5910]

Thanks a lot for explaining these terms in such a simple manner mate! 🙏❤️

[@zwitterion1]

Amazing video - for a clinical background founder!! Thanks Caya and slidebean

[@slidebean]

Thank you for your comment! Glad it was useful!

[@pv0315]

wonderful stuff. Many useful pointers - Interest coupon, Discount @ Valuation, Valuation Cap. Nice.

[@AnuragBhatnagar01]

Great video - complex topic explained simply. One question - at 11m:59s, the numbers of shares to Gus & Madrigal (and their percentages) seem to have been switched, and the total is more than 100%. Would be nice if you reposted the corrected percentages and numbers of shares at that time stamp.

[@ChuckBalsamo]

Best video on convertible notes! Wow you are such a great presenter. Thank you!

[@slidebean]

Glad it was helpful!

[@michaeloshogbunu1891]

I wasted 8 hours reading blog posts. Meanwhile, your video nailed it in 15 minutes. wooow !!!

[@michaeloshogbunu1891]

For this sake, I now love the Slidebean brand!

[@judozimbabwe7820]

listening to this from Zimbabwe . thanks

[@slidebean]

Thanks a lot!

[@ashrafghaban1030]

Thank you, Caya, for the simplified explanation. I believe that in your second example with the CAP value, the shares, and stock percentage for GUS and MADRIGAL should be inverted.

[@slidebean]

Thanks for sharing!

[@hessam97]

I haven't seen a more thorough explanation anywhere else yet. This is a great video. Thanks!

[@jorgerangel2390]

Congrats, this is the best video explaining equity in detail.

[@bronzebond4869]

This channel is awesome. Thanks for ALL of this solid content and honestly telling your story. Shout out to the KZbin algo for sending a good teacher my way

[@waleolapo]

Thanks guy many of my questions answered in one video. really appreciate your work

[@slidebean]

This is awesome!

[@cayahere]

You're welcome, dude.

[@engineeringoutloud]

Very Helpful work guys. Kudos.

[@cayahere]

Thanks for watching!

[@BrettFoxstartupceo]

Nice run through of basic information about equity.

[@fullstackmarketing247]

Damn! Best video I have seen about the topic. Good work!

[@slidebean]

Wow! Thank you!

[@vitikahappy]

Every time I watch this guy leaning forward I have a feeling that his head will pop-up from my screen any moment :-) But great explanation indeed. Thank you.

[@dustinthegael]

There is an error in the graphic at 11:49, green and yellow on the pie chart were switched

[@Rhh26]

dustinthegael thanks, ive had the video paused for 10 minutes wondering if my maths had gone wrong.

[@ryanackert1536]

@@Rhh26 lol same here bro lol. Had me all f'd up

[@Dr_Adar]

To be exact, I believe the error is the SWITCHING of of Gus's shares and Madrigal's shares. Gus should have 75k shares and Madrigal should have only 21.5k

[@shivamprasad7237]

Exactly. I've been breaking my head since long.

[@mazdamatt7703]

Incredible content as always 🙌🏻

[@slidebean]

😊 thanks!!

[@saibharathwajsaikannan3783]

Pretty much clear! Enjoyed. Looking forward to watching an in-depth vlog on employee stock - pros and cons!

[@johnchinyuku3063]

This is very good very informative and straight to the point thank you. I have subscribed

[@slidebean]

Thanks for the sub!

[@HristoVelev]

Appreciating these videos, thanks!

[@inecosolarsolutions9022]

This looks very good, thanks for sharing the knowledge. Could please explain the number of shares for Gus and Madrigal at 10:57?

[@ronnycoding]

Excellent class, thanks for the video!!

[@Gorboduc]

*THIS IS THE ONLY USEFUL STARTUP EQUITY VIDEO ON KZbin*.

[@winterfox7028]

You explained very well . Enough to start a company .

[@saadiquemerchant]

Also, thanks for this amazing video. I'm so used to learning alot from your videos that I forgot to thank you guys for putting it up

[@kennyomodara]

Well done. A very insightful video.

[@slidebean]

Thank you for your comment! Glad it was useful!

[@ezhrm-staffmanagementmadee5995]

Good quality and great content love your videos man. keep it up.

[@slidebean]

Thanks! Join us live on Discord in case you have any questions! slidebean.com/live

[@sonydominates]

Awesome video!! I've learned this before, but definitely not this visually compelling and concise manner! Awesome work as usual!

[@ryansmith8201]

Great explanations keeping it simple and straight forward. Thank You !!!!

[@slidebean]

Thanks Ryan! 😉

[@benjaminalexofficialgmailc5679]

Ryan Smith yeah really smart,You thought of investing in bitcoin really profitable you know

[@davidsaias4397]

excellent description of process. Nice job.

[@slidebean]

🙌

[@cayahere]

Thanks, David!

[@Tyrell_ai]

Man, your video makes it so easy to understand. Really thank you!!!

[@anish.wijesinghe]

Extremely helpful. Thank you!

[@cayahere]

Thanks for watching, Anish. Glad you found it useful.

[@karuneshnigam7311]

Wonderfully explained...👍

[@slidebean]

Thank you 🙂

[@SanjayKapoorDelhi]

Thanks for the wonderful video. Just wanted to clarify Scenario B at 11:59 minutes in the video, you mentioned $50 Million valuation, the total equity distribution %age is coming to 105.6% (48.4 + 48.4 + 6.8 + 2) which is more than 100%!! Also, I am a bit confused about the holding of Gus at 2% and Madrigal @ 6.8% in this distribution.

[@s78932]

your videos are amazing! answered some questions I've always wondered.

[@slidebean]

Thank you for watching!

[@josedariolozano4607]

excellent video. Great example of a convertible note

[@12369jp]

This is the explanation I've been looking for my whole life!

[@slidebean]

Wow! That's a big deal! Thank you, Justice!

[@Manishsharma-nb1qw]

First channel which I’ve subscribed on my interest...👍🏻

[@bimskool]

YC does have a video on this but it's not as good in explaining dilution and the math behind everything. There is such a thing as a convertible note without interest called a SAFE which may or may not have a valuation cap.

[@kaname110]

Super cool and informative video! Thanks a lot!

[@praveenkumarpanna3618]

Thanks dude! Very informative.

[@slidebean]

Glad it was helpful!

[@donnacooney4426]

Excellent overview - very simple to follow in such a confusing environment

[@balamuralikrishnakrishna4969]

Awesome bro .. Looking for more for startup and functions

[@sahibsingh5294]

kudos man doing such a great work

[@slidebean]

Thanks, Sahib!

[@ethanhalf]

As a founder currently accepting convertible notes from Angel investors thank you for the clarity. I would love to have speak to you more about this topic

[@AX_imPACT]

Thank you for this, soo much needed.

[@slidebean]

Glad it was helpful!

[@EngTeacherHK]

Wow!!! VAL-YOU!!! Thank you sooo much, guys!

[@slidebean]

Our pleasure!

[@saikiranbeesam1367]

Your videos are the best. Thank you so much!

[@mohammedadel4973]

brilliant , simple and clear!. thanks!