Systematic Shareholding Structure from Inception and Fundraising Rounds
Key words:
1. Incorporation Round:
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Founding Share Structure: Equity is divided among founders in varying ratios.
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Initial Focus: The company focuses on business growth.
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Shareholder Conflict: After a few years, conflicts arise due to differing visions or perceived unfair profit distribution.
2. Pre-seed Round:
This is when the MVP (Minimum Viable Product) is released.
3. Seed Round:
This is when the proven business model is found.
a. A formula for the market and customer segments is developed and the MVP is refined.
b. The structure management system is built to support value creation.
c. A profitable cost structure and positive cash flow model are achieved.
4. Series A Round:
A round of strong capital injection
5. Series B Round:
- Investment decision depends on market size and potential.
- Securing funding at this stage is challenging for companies with limited market reach.
- Common funding rounds include PE Rounds, Investment Banking Rounds, and IPOs.
- Early funding rounds are typically the most difficult to secure.
- Reaching this stage indicates the company’s significant maturity.
6. Intial Total Share Pool:
Circulation for share price calculation in each round
7. ESOP
Grant employees, who satisfy certain conditions, shares, to enable them to be shareholders. For example, they should be those who dedicate their time to the company and believe in the company’s direction or future.
8. Pre – money Valuation:
The estimated value of a company before it receives funds from investors or financing.
9. Post – money Valuation:
The estimated value of a company after it receives funds from investors or financing.
10. Price per share
Agreed-upon valuation after negotiation divided by the total number of outstanding shares
11. Shares acquired:
Number of shares owned by each shareholder (purchased in the current funding round) according to the investment ratio.
12. Shares value:
Money value of a shareholder’s shares
13. Owned shares:
As of now, how many shares does each shareholder currently own (note: there are rounds that bonds are converted into equity)
14. Own stake:
Corresponding percentage of shares
15. Owned value:
Money value of the stake
16. This round: the current round
17. Post round: the round after receiving fund from investors
18. Date: Effective date of establishment/loan/disbursement
19. Round type: Convert convertible debt or Safe note into equity
20. Valuation cap:
Market capitalization at this round = Number of shares x Price per share
21. Valuation discount
Early-stage investors, who accept the high risk, are rewarded with the discount
22. Interest rate
23. Involved parties
24. Founders
The results in the above table will be the best if founders can do the followings:
a. Found the proven business model
Basically, financial knowledge is indispensable in doing this. Otherwise, investing large amounts of capital can be cumbersome and challenging to achieve the desired asset growth rate for investors.
The proper time to find one is 18 months.
Fact: Many companies over five years old have yet to find a replicable success formula and require significant adjustments when incorporating a financial perspective.
b. Established a reliable accounting team that has generated a substantial amount of historical data and financial reports.
Equitix Investing can assist founders in this process
c. Had a CFO who can provide an 8-year future plan, including:
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KPI metrics: Track revenue, EBITDA, and EPS for each funding round.
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Funding needs: Align funding disbursements with growth requirements.
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Company valuation: Determine company valuation per round, considering growth and maturity.
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Anti-dilution shares: Issue additional shares to protect existing shareholders from dilution.
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Average cost of capital: Calculate the average cost of capital across all funding sources.
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Financial tools: Employ appropriate financial tools to manage investor/creditor payables.
Currently, Equitix offers intensive founder-focused courses on management, governance, and in-depth business understanding from a financial perspective, as follows:
a) Course 01: Finance & Accounting for non-finance founders: learn to speak the same language as your finance and accounting team for business operations and asset management, and understand the language of shareholders and professional financial investors.
- 4-6 sessions
- Tuition fee: VND7.5mn /person
- Early bird registration: VND6.9mn/person
- Group registration: VND6.5mn/person
b) Course 05: Business Operations, Organization & Management According to Financial Plan (Revenue, Expenses, Profit)
- 4 – 5 sessions Tuition fee: VND6.5mn/person
- Early bird registration: VND5.9mn/person
- Group registration: VND5.5mn/person
c) Course 02: In-depth BSC Course – KPIs, From Strategy to Implementation in the Process of Receiving Capital from Investors 12 sessions
- Tuition fee: 35,000,000 VND/person
- Early bird registration fee: 32,500,000 VND/person
- Group registration fee:
- Group of 2: 32,000,000 VND/person
- Group of 3-4: 31,000,000 VND/person
- Group of 5 or more: 29,000,000 VND/person
d) Special Discount Course: 39,000,000 vnd (Original Price: 49,000,000 vnd). Students will have access to all of Equitix’s online and offline courses for 1 year.
e) 1:1 Finance Mentorship Program
- Evening sessions (6-10 sessions)
- Tuition fee will be quoted based on individual needs (after a 1:1 interview) and will vary depending on the business model, existing accounting data, the specific challenges faced by the founders, and the need for privacy and data security.
f) F1 Mentoring Program – Asset Management
- Tuition fee will be quoted based on individual needs (after a 1:1 interview) and will vary depending on the business model and your level of commitment.
Instructor Information: Lucas Phung.
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