Established 2024
Venture Capital
Mechanics & Math.
The definitive repository for founders and emerging managers. Decode term sheets, map dilution, and understand the economics driving startup capital.
Read the Term Sheet GuideCore Directives
Essential Frameworks
Term Sheet Anatomy
Economic vs. Control terms. Understand the NVCA model and the non-negotiables of modern venture funding rounds.
Read Guide →Cap Table Construction
Option pool math, pro-rata rights, and fully-diluted calculations. See how early decisions impact late-stage outcomes.
Read Guide →Fund Economics
Management fees, carried interest, hurdle rates, and the 2/20 model. How venture funds return capital to LPs.
Read Guide →The Math Behind the Money.
We provide 15 interactive calculators modeling standard VC formulas. No black boxes. We state the assumptions (e.g., post-money SAFE conversion, broad-based weighted average anti-dilution) and provide non-JS formula fallbacks.
| Tool | Complexity |
|---|---|
| Dilution Modeler | Low |
| SAFE Converter | Medium |
| Liquidation Waterfall | High |
| Option Pool Shuffle | High |
Standardizing the Seed Round: The Post-Money SAFE
Since its introduction by Y Combinator in 2013, the Simple Agreement for Future Equity (SAFE) has effectively replaced convertible notes as the default instrument for pre-seed and seed financing.
The crucial update occurred in 2018 with the shift to the Post-Money SAFE. Under the original pre-money version, founders could not accurately calculate their dilution until the priced round occurred. The post-money SAFE resolved this by fixing the investor's ownership percentage at the time of investment, shifting the dilution burden of subsequent SAFE notes onto the founders rather than early investors.
Read the SAFE GuideKey Differences
| Feature | Pre-Money SAFE | Post-Money SAFE (Current) |
|---|---|---|
| Ownership Fixed | At priced round | At time of investment |
| Dilution | Shared among SAFE holders | Borne entirely by founders/common |
| Pro-Rata | Usually included | Requires a separate side letter |
Venture capital is a power-law asset class. Median returns do not matter.
65%
Percentage of VC investments that return less than 1x capital invested. (Source: Correlation Ventures, 2023)
4%
Percentage of investments that generate 60% of all venture industry returns. The "home runs".
2.5x
Target net DPI (Distributions to Paid-In Capital) for a top-quartile early-stage fund over a 10-year lifecycle.
Fund Directories
Top Seed Funds
Directory of 100+ active lead seed investors, their standard check sizes, and focus areas.
Browse Seed FundsTop Series A Funds
Directory of institutional Series A leads requiring $1M+ ARR and strong unit economics.
Browse Series A FundsFrequent Structural Errors
01. Uncapped Notes
Raising on uncapped SAFEs or notes during a bull market defers valuation discussions, but often results in catastrophic founder dilution when the priced round finally occurs at a lower-than-expected valuation.
02. Participating Preferred
Agreeing to "double-dip" liquidation preferences (e.g., 1x participating). In moderate outcomes, this structure drastically shifts returns from founders to investors compared to standard non-participating preferred.
03. Oversized Option Pools
Allowing investors to mandate an excessive post-money option pool (e.g., 20%+) when hiring plans only require 10%. Because the pool is calculated pre-money, this directly reduces founder equity.
The Deal Lifecycle
1. Sourcing & Pitch
Warm introductions, partner meetings, and the initial data room review. Ends in a verbal "yes" or "no".
2. Term Sheet
A non-binding 2-5 page document outlining valuation, liquidation preferences, board structure, and protective provisions. Initiates exclusivity.
3. Due Diligence
Legal, financial, and technical review. Checking IP assignments, corporate structure, and customer references. Typically 3-5 weeks.
4. Closing
Drafting definitive agreements (SPA, IRA, ROFR, Voting Agreement). Signatures and wire transfer.
Speak the Language.
Venture capital utilizes highly specific terminology that governs immense financial outcomes. Do not sign documents you do not fully comprehend.
Read the GlossaryPro-Rata Right
The right of an investor to participate in future funding rounds to maintain their percentage ownership.
Drag-Along Right
A provision that enables a majority shareholder to force minority shareholders to join in the sale of a company.