Show HN: Startup funding simulator

Hi HN

We built a tool to help founders understand how modern fundraising (with safes) works, and how much dilution you can expect when raising money.

The project is open-source. The code is a mess right now, but it'll get better I promise. You can also help with that.

We didn't build this to make money. We genuinely did it because we were looking for it, and couldn't find it.

We're in fact in the process of fundraising for a company, and at first glance the process looks simple. Just an excel sheet will do! But then the more we dug into it and tried different simulators, the more we realized that it's more complex than it looks.

We even signed up to Pulley, Carta and others just to run simulations. But they're a bit confusing.

TL;DR: Understanding modern startup funding and knowing how much dilution you'll face is hard. We built a tool that'll hopefully help with that. You can add Post-money Safes, priced rounds and issue options to employees, and you can see how that affects your ownership at every step. You can also simulate an Exit scenario and see how much money you'll be left with.

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Some examples of complex stuff:

- There are many different types of safes. They all convert at the first priced round, but in different ways. Some are through discount, some are uncapped, some have a fixed valuation cap, and some have both a discount and a valuation cap.

- All safes (before first priced round) convert at the same time. They don't dilute each other, which is what happens in the rest of fundraising.

- Investors often require you to set aside some options. This one is particularily nasty. Basically, if an investor expects you to set aside 10% as options, and expects to get 10% equity, that's what should appear in the subsequent cap table. However, calculating the options is difficult, and is often a circular calculation (even Kirsty Nathoo from YC says it's complex and avoids showing the calculation in the Safe video "Understanding SAFEs and Priced Equity Rounds")

- Safes and priced rounds can have pro-rata, but don't always exercise it

- Pro-ratas of safes are taken from the priced round money, so you'd expect the safe holder's equity to remain the same if they exercise it. BUT ... it gets diluted by the new options issued.

- Safes can have an MFN provision, which defers the valuation discussion/calculation until the moment the priced round is about to close. With a mix of discounts, uncapped and valuation caps, it gets tricky to know which deal is "better".

- ...

Assumptions and limitations:

- Only post-money safes and priced rounds.

- No down rounds. There's a bit more complexity around liquidation preferences and anti-dilution rights - we don't support that now. It only matters if you're simulating a "bad" situation. But come on, it's a simulator — Be optimistic.

- No pro-rata caps. We might add that soon, to fully support the YC standard deal. But for now, if an investor gets a pro-rata, they can exercise either all of it (keeping their original ownership) or none.

- Safes' pro-ratas disappear after the first priced round. (I think this is what happens normally?)

- Remaining available options get redistributed evenly at exit.

- The round is the investor. For the sake of simplicity, consider "Series A" as the combination of all series A investors into one, super-investor.

Let us know what you think!

Show HN: Startup funding simulator
fundingsimulator.com

Very nice work, this will help to play through different scenarios. It might be worth it to show that different industries have very different up front capital requirements and that for instance a template for doing a hardware startup has rough indications of how much of the total funding is required at which stage of the venture.

This is where I see a lot of people make - very costly - mistakes in terms of dilution, they start a hardware startup or some other capital intensive track but use SaaS levels of capital requirement and timing to plan their liquidity. This obviously can impact the business in very negative ways (or can even cause it to go under). So to inject some realism into the figures at various phases using templates might be a useful thing.

Another thing you may want to consider is to put sweat equity and funds supplied by the founders in there, as well as a way to administer friends-and-family rounds, and to be able to play through a founder departing scenario. I realize those are complex things to do, and obviously you're under no obligation to do any of this.

Thank you for making this and for putting it out there.

I'm not sure if this feature request makes sense: also enabling having an option pool created at the SAFE round. I've had a situation where a lead investor requested an option pool created as part of a pre-seed round on SAFEs.

Bootstrapping a business with my savings to retain full control is both the wisest and hardest thing I’ve done.

I don’t understand why people are so quick to start giving up control out of the gate for software companies. Servers are cheap, it’s not like in say, manufacturing where you need a factory.

You’re gonna let some VC bro tell you what to do for a SaaS product? Why exactly? Just go to market on the cheap.

I’ve had every quarter profitable since founding, and never taken a dime in VC. I’m not going to be a billionaire, but that’s fine, I want to chart my own path.

I sold my biz for 16B then went back and deleted the funding rounds and founders. I made 16B. I like this.