Run the company

Each lesson in this course looked at one decision. An actual company makes all of them, one after the other, and each decision changes the next one. At the end, a buyer pays one price for the whole company. Then one number is important to each person: the cash that the person gets from the sale.

In this lesson, you run Northwind Labs from its first share to its sale. Ada and Ben found the company, and you make every money decision for them. At each step, the simulator shows what your decision costs. At the end, it shows what Ada, Ben, the employees, and each investor get.

Make one prediction first

The simulator starts with a default path. Its seed and its Series A are near the Carta medians for Q2 2026. On that path, Ada and Ben own 44.47% of Northwind after the Series A. Before you read on, enter a number.

Predict first

On the default path, the founders own 44.47%. The Series A paid $15M for 20%, with a 1x non-participating preference. A buyer pays $50M. What part of the $50M do Ada and Ben get?

Type a guess before you continue. A guess first, even a wrong one, makes the answer easier to remember.

Your guessSave my guess

A guess of 44.47% is natural. Founders think in percentages, but a sale pays in dollars and in a fixed order. The rest of this lesson shows where each point of the difference comes from.

How the simulator works

The simulator has five steps: found, pre-seed, seed, Series A, and sale. Each step starts with offers that you can select. Under the offers, you can change each number. The math uses the same functions as the other calculators in this course.

The simulator makes the model simpler in these ways:

• Northwind starts with 10,000,000 shares for its two founders.
• All SAFEs are post-money SAFEs with a valuation cap and no discount. In Q2 2026, 91% of SAFEs on Carta were post-money SAFEs.
• The seed uses the Series Seed documents. Its preferred stock has a 1x non-participating preference and no price-based anti-dilution.
• By the sale, Northwind grants its full pool to employees. The simulator counts their options as exercised and does not include the small exercise price.
• The sale price is the net proceeds: the money that the shareholders divide. An actual sale first pays debt and fees, and the buyer can hold back part of the price in an escrow.

The simulator cannot know one important thing: how much progress the money buys. For one sale price, less dilution always pays the founders more. The real question is different: does the extra money make a larger sale possible? This limit is important each time that you compare two offers.

Step 1: found the company

Ada and Ben divide 10,000,000 shares between them. The split sets only how the founders share their part. Investors buy a percentage of the whole company, so the split does not change what an investor gets.

The vesting decision is important when a founder stops work at the company. With the standard schedule of four years and a one-year cliff, no shares vest for 12 months. At month 12, 25% vests at once. Then the rest vests in equal parts each month for 36 months. For example, Ben holds 5,000,000 shares. He stops work at month 18:

Ben keeps    = 5,000,000 × 18 ÷ 48
             = 1,875,000 shares
Company buys = 5,000,000 − 1,875,000
             = 3,125,000 shares

The company buys the unvested shares from Ben at the small price that he paid. If Ben stops work at month 9, before the cliff, he keeps nothing. Without vesting, he keeps all 5,000,000 shares but does no more work. Investors call this dead equity. The lesson on vesting and cliffs gives the full rules.

Step 2: raise a pre-seed on SAFEs

A post-money SAFE sells a fixed part of the company: the amount ÷ the post-money valuation cap. Each new SAFE dilutes the founders, not the SAFEs before it. So you add the percentages:

SAFE 1   = $500K ÷ $8M  =  6.25%
SAFE 2   = $500K ÷ $10M =  5.00%
Sold on SAFEs           = 11.25%
Founders keep           = 88.75%

The SAFE holders get their shares later, at the seed round. But the founders sell the 11.25% on the day that they sign the SAFEs. The lesson on post-money cap math shows why the shares come later but the percentage does not change.

Step 3: raise the seed and set the pool

In the seed round, three events occur at the same time. The SAFEs convert, the company adds an option pool, and the new money comes in. The investors want the pool inside the pre-money valuation. Thus the pool dilutes only the holders from before the round: the founders and the SAFE holders. This is the option pool shuffle.

On the default path, the seed investors buy 20%, and the pool is 12% of the company after the round. The founders and the SAFE holders keep the other 68%. So each earlier holder keeps 68% of its percentage:

Founders after the seed
  = 88.75% × (1 − 20% − 12%)
  = 88.75% × 68%
  = 60.35%

The simulator also asks how many options Northwind grants to its first employees before the Series A. Grants come out of the pool. They do not add new shares. The lesson on the option pool shuffle shows how a hiring plan sets the pool.

Step 4: raise the Series A

The Series A investors also want a pool, as a part of the company after their round. Before the round, part of the seed pool is still unissued. The company adds only the shares that the pool does not have. This is the pool top-up. All earlier holders pay for the top-up, and this time the seed investors pay too.

On the default path, Northwind granted 7% of the company, so 5% is still in the pool. The other holders own 95%. After the round, the new investors own 20% and the pool owns 10%, so the other holders own 70%. The percentage of each of these holders changes by 70% ÷ 95%:

Founders after the Series A
  = 60.35% × 70% ÷ 95%
  = 44.47%

The second Series A offer has a higher price but harder terms: a 2x preference, full participation, and seniority over the seed. It dilutes the founders less. The sale step shows what those terms cost. The lesson on two offers explains each term.

Step 5: sell the company

The waterfall divides a sale price. Each preferred series selects the better of two alternatives. It can get its liquidation preference, or it can convert to common stock and get its percentage. A clean 1x non-participating series converts only when its percentage pays more than its money back. If each earlier series paid a lower price per share, the newest series converts at its post-money valuation. That sale price is its conversion point.

On the default path, the Series A paid $15M for 20%, at a $75M post-money valuation. At a sale price of less than $75M, the Series A gets its $15M first, and the founders get less than their percentage. At $75M or more, every investor converts, and each holder gets exactly its percentage. The lessons on the waterfall and the conversion point show the full procedure.

Run your company

Move through the five steps. Change a decision, then go to the sale and look at the result. To compare two paths, open the sale step and select Save this run to compare. Then change one decision. Each result now shows the saved run below it.

Simulator

Run Northwind Labs from founding to sale

Make each money decision for one startup. Then sell it and see what each person gets.

Step 1 of 5

Found the company

Ada and Ben start Northwind Labs with 10,000,000 shares. Decide how they split the shares and if the shares vest.

Split between Ada and Ben

50/5060/4070/30

Founder vesting

4 years, 1-year cliffNone

Does Ben stop work before the seed?

NoAt month 9At month 18

Ada owns

50%

5,000,000 shares

Ben owns

50%

5,000,000 shares

Bought back

0

Unvested shares

Company shares

10,000,000

Issued to founders

Ada holds 5,000,000 shares and Ben holds 5,000,000. The split decides how the founders share their part. It does not change what any investor gets.

Ownership after each step

Founding

Founders 100%

Next: Pre-seed

Five experiments to try

A simulator teaches more when you ask it a question. Each experiment starts from the default path, so select Start again before each one. To see each difference in dollars, first go to the sale step and save the default run. Think of an answer for each experiment before you look:

1. Keep the sale price at $50M. Select the big SAFE stack in step 2. How much less do Ada and Ben get?
2. In step 3, change the pool from 12% to 20%. Keep the grants at 7%. Do the founders own more or less after the Series A?
3. In step 4, select the harder offer. Then move the sale price from $50M to $1B. At which price do the two offers pay the founders the same?
4. In step 1, let Ben stop work at month 18. Sell for $100M with vesting, then with no vesting. Compare what Ben gets.
5. In step 3, select the hot seed. In step 4, set the Series A pre-money valuation to $30M. Compare the two prices per share.

Show the results of the five experiments

1. The stack sells 21.67%, not 11.25%. The founders own 37.73% after the Series A, not 44.47%. They get $16.51M from a $50M sale, not $19.45M, so the three SAFEs cost them $2.95M.
2. Less. The founders own 42.6%, not 44.47%. At the seed, only the founders and the SAFE holders pay for the larger pool. A top-up at the Series A costs them less, because the seed investors share it.
3. The two offers pay the founders the same at $450M. At a sale price of less than $450M, the clean offer pays the founders more or the same. At more than $450M, the lower dilution of the harder offer pays more than its $30M preference costs.
4. With vesting, Ben gets $12.13M and Ada gets $32.34M. With no vesting, each founder gets $22.23M, although Ben stopped work after 18 months.
5. The seed price is $2.68, and the Series A price is $1.80. This is a down round: the price is 33% less than the seed price. A hot seed makes the next round harder.

The default path, step by step

This worked example follows the default path from the first share to a $50M sale. Try each step in your head before you open it.

Worked example · step 1 of 7

Northwind Labs from founding to a $50M sale

1. 1

   Found the company

   Ada and Ben each hold 5,000,000 shares. They own 100% of the company.

   Founders: 10,000,000 shares
   Ownership: 100%

Show step 2Show all steps

Your turn

Do these problems for a different company. Each problem gives less help than the problem before it.

Work it out

A company signs one $1M SAFE at a $10M post-money cap. Then its seed sells 20% and adds a 10% pool inside the pre-money valuation. What do the founders own after the seed?

Your answerCheck

Work it out

After the seed, the founders own 63%, and 4% of the company is still in the pool. The Series A sells 20% and wants a 10% pool after the round. What do the founders own after the Series A?

Your answerCheck

Work it out

A Series A paid $10M for 20% with a 1x non-participating preference. The founders own 45%. The company sells for $40M, and every other investor converts. How much do the founders get?

Your answerCheck

How the default path compares with actual companies

The default path keeps the founders above the medians: 60.35% after the seed and 44.47% after the Series A. Actual founders usually own less. Many companies sell more than one set of SAFEs, raise a bridge before the Series A, add larger pools, or lose a cofounder. The simulator lets you make most of these decisions. Change them one at a time, and look at the founders’ percentage after each change.

Quiz · question 1 of 5

Test what you learned

Ben holds 5,000,000 shares on four-year vesting with a one-year cliff. He stops work at month 9. How many shares does he keep?

• A1,250,000
• B937,500
• C0
• D5,000,000