Use this worksheet alongside any term sheet you are about to sign. The lawyer makes sure the contract says what it says. The worksheet makes sure what it says is what you want.

Run the model in a spreadsheet, paste the rows below into a planning doc, or sketch it on the back of an envelope. The format does not matter. The forcing function does.

Section 1: Pre-money inputs

Pre-money valuation: $______
Round size: $______
Post-money valuation: $______
Investor ownership at close: ___ %
Founder ownership at close: ___ %
Option pool top-up before close (post-money %): ___
Option pool top-up source (founder dilution / investor dilution / blended): ______

The option pool source is the single most-overlooked field. Pool top-ups out of founder shares (the "shuffle") double the dilution at any future down-round trigger.

Section 2: The three exit scenarios

Model three exit valuations. The realistic one (what the deck assumes), the soft one (a respectable but unspectacular outcome), and the moonshot (one investor would brag about). For each, calculate founder share under the three preference structures below.

Realistic exit: $______
Soft exit: $______
Moonshot exit: $______

Section 3: The three preference structures

A. 1x non-participating (market-standard)

Investor takes back the round amount first, then converts to common and shares the rest pro-rata. This is the default the term sheet should propose.

Realistic founder share: ___ % = $______
Soft founder share: ___ % = $______
Moonshot founder share: ___ % = $______

B. 1x participating

Investor takes back the round amount first AND shares the remainder pro-rata. The redline reads "1x participating". The math reads "founder loses about a million dollars on a $28M outcome". Model it before you sign.

Realistic founder share: ___ % = $______
Soft founder share: ___ % = $______
Moonshot founder share: ___ % = $______

C. 1.5x non-participating (slightly above market)

Sometimes proposed in down markets or by funds with portfolio standards. The 1.5x means investor takes back 1.5x the round before converting. Looks small on paper. Calculate it explicitly so it stops looking small.

Realistic founder share: ___ % = $______
Soft founder share: ___ % = $______
Moonshot founder share: ___ % = $______

Section 4: Anti-dilution stress test

If the next round prices below this round, the anti-dilution clause adjusts the investor's share class. Model what happens to the founder column under three plausible next-round prices.

Next round at +50% valuation: founder share = ___ %
Next round at flat valuation: founder share = ___ %
Next round at -25% valuation: founder share = ___ %

If your next-round-down case shows founder share dropping by more than five percentage points, the anti-dilution mechanism is doing more work than the term sheet implied. Push back on the trigger definitions, not the rate.

Section 5: The three numbers worth seeing

Fill these last. They are the numbers that decide whether the deal is the deal you think it is.

Difference in founder dollars between A and B at the realistic exit: $______. (This is the cost of accepting participating. If it is over a hundred grand, do not accept it.)
Founder share at the soft exit under B: ___ %. (The soft case is what most companies hit. If your share here drops below thirty percent, the term sheet is not a partnership; it is a workout.)
Founder share at the next-round-down scenario: ___ %. (Most term sheets read fine when the next round is up. The structural risk lives in what happens when it isn't.)

When to push back

Most lead investors will negotiate when shown a model. The fund's standard term sheet is a starting position, not a final stance. Pushing back with a model in hand is a different conversation from pushing back with an opinion. The model lets the partner take the change to their committee with cover; the opinion makes them defend the original position.

A clean redline is a useful artefact. It is not the same artefact as a clean deal. The deal is decided in the model the redline never sees.

Template from Marga Haus · margahaus.com/resources · Adapt and use freely. Attribution appreciated, not required.

Cap-table modelling worksheet