In the dynamic world of startups, equity represents ownership in the company.
Distributing this ownership strategically is crucial for attracting talent, securing investment, and incentivizing stakeholders.
The Startup Equity Calculator helps you understand how much equity is available for future allocation after accounting for founders, investors, employees, and advisors.
Why Equity Matters:
Founders: They are the visionaries and often bear the initial risk, deserving a significant stake.
Investors: They provide essential capital in exchange for ownership, fueling growth.
Employees: Stock options or grants incentivize key personnel and align their interests with the company's long-term success.
Advisors: They offer valuable expertise and guidance, often compensated with a small equity portion.
How the Calculator Works:
This calculator operates on a simple, yet fundamental principle: the total equity of a startup is always 100%.
By inputting the percentages of equity already allocated to founders, investors, employee stock option pools (ESOPs), and advisors,
the calculator determines the remaining equity available for future rounds of funding, employee grants, strategic partnerships, or other allocations.
This means 15% of the company's equity remains available for other purposes.
Use Cases:
Early-Stage Planning: Founders can use this to visualize their initial cap table and plan for future dilution.
Fundraising Discussions: Understanding remaining equity helps in negotiating terms with potential investors.
Employee Compensation Strategy: It aids in determining the size of ESOPs needed to attract and retain talent without over-diluting existing stakeholders.
Scenario Analysis: Quickly model different equity distribution scenarios to see their impact on available equity.
It's important to consult with legal and financial professionals when making final equity decisions, as tax implications and corporate governance structures can be complex.
function calculateEquity() {
var founderEquityInput = document.getElementById("founderEquity");
var investorEquityInput = document.getElementById("investorEquity");
var employeePoolInput = document.getElementById("employeePool");
var advisorEquityInput = document.getElementById("advisorEquity");
var founderEquity = parseFloat(founderEquityInput.value);
var investorEquity = parseFloat(investorEquityInput.value);
var employeePool = parseFloat(employeePoolInput.value);
var advisorEquity = parseFloat(advisorEquityInput.value);
var resultDiv = document.getElementById("result");
var remainingEquityValue = document.getElementById("remainingEquityValue");
var totalAllocated = 0;
var errorMessages = [];
if (isNaN(founderEquity) || founderEquity 100) {
errorMessages.push("Please enter a valid number for Founder's Equity between 0 and 100.");
} else {
totalAllocated += founderEquity;
}
if (isNaN(investorEquity) || investorEquity 100) {
errorMessages.push("Please enter a valid number for Investor's Equity between 0 and 100.");
} else {
totalAllocated += investorEquity;
}
if (isNaN(employeePool) || employeePool 100) {
errorMessages.push("Please enter a valid number for Employee Pool between 0 and 100.");
} else {
totalAllocated += employeePool;
}
if (isNaN(advisorEquity) || advisorEquity 100) {
errorMessages.push("Please enter a valid number for Advisor Equity between 0 and 100.");
} else {
totalAllocated += advisorEquity;
}
if (errorMessages.length > 0) {
remainingEquityValue.textContent = errorMessages.join(" ");
remainingEquityValue.style.color = "#dc3545"; /* Red for errors */
resultDiv.style.display = "block";
resultDiv.style.borderColor = "#dc3545"; /* Red border for errors */
return;
}
if (totalAllocated > 100) {
remainingEquityValue.textContent = "Total allocated equity exceeds 100%. Please review inputs.";
remainingEquityValue.style.color = "#dc3545"; /* Red for errors */
resultDiv.style.display = "block";
resultDiv.style.borderColor = "#dc3545"; /* Red border for errors */
return;
}
var remainingEquity = 100 – totalAllocated;
remainingEquityValue.textContent = remainingEquity.toFixed(2) + "%";
remainingEquityValue.style.color = "#28a745"; /* Green for success */
resultDiv.style.display = "block";
resultDiv.style.borderColor = "#28a745"; /* Green border for success */
}