This post is self serving to some degree as USV is an investor in eShares. But in the world of VC and startups there isn’t much that is more broken than cap table management. eShares fixes that by putting the entire cap table online and allowing your company to issue new shares and options directly from the platform. It’s kind of like writing checks directly from your accounting system. Everything gets recorded and there are no missing stock certs or broken promises.

I explained this to one of our portfolio companies last fall around the time we made our investment in eShares. One of the co-founders replied via email “we don’t need that, our cap table is all in a single spreadsheet.” A month or two later, as we were doing a round of financing, when the lawyers were doing their diligence, it came out that our cap table spreadsheet was missing some shares that had been issued but not recorded. I had a good laugh at that because it is always the case that something is not recorded. A perfect cap table is very rare, unless you are using a tool like eShares.

The VCs and angel investors aren’t hurt so much by this because our investments are large and mistakes made on our shares are easily caught. Employees are the ones who have the most to gain from eShares because they are the ones whose issuances are most often missed or not properly recorded on a cap table and these mistakes can go on for a long time before being caught. This causes issues in terms of exercise price changes and tax issues for the employee.

If you are starting a company, do yourself a favor and start building your cap table day one on eShares. If you have been managing your cap table in a spreadsheet for years and are tired of doing it that way, talk to eShares. They will help you “port” your cap table to their system. That’s part of the onboarding service they provide. And then you can start issuing shares the way you’d imagine it would be done in 2015. The way most companies is doing it is circa 1900. I’m serious about that.

If you want to learn more about eShares, contact them here.

#entrepreneurship#Uncategorized#VC & Technology

Comments (Archived):

  1. awaldstein

    My new rules:Anything I do on a solitary unconnected spreadsheet is invariably a poor work process.The more I can do to add transparency to employee information, within reason, is always a good thing.And confidentially–I screw up on cap tables. This product may have been built with me in mind.

    1. Mario Cantin

      You two need a private chat room, ha ha, just kidding!

      1. awaldstein

        I’ll take that as gentle prod to take a vacation. Probably a good idea.

    2. fredwilson

      or me!

  2. William Mougayar

    “If you are starting a company, do yourself a favor and start building your cap table day one on eShares.” This screams for a freemium price entry, but it seems that their entry price is $100, which is close to “free” because of the immediate value.Is there a word for freemium that is not free, but dirt cheap- Cheapium?

    1. awaldstein

      how about priced right?

      1. William Mougayar

        but is “priced right” enough of a no-brainer/low-hurdle incentive to try it?i think it needs to be under-priced to create the pull that freemium generates.

        1. awaldstein

          Cheap is a bad price almost always.Selling value is what companies do.I get Freemium, I get value based pricing, I don’t get a hybrid as much except a mishmash.

          1. William Mougayar

            But I like the eShares pricing model- it’s the Gillette razor/blades model. Get in for reasonably cheap, but pay more over the usage lifecycle, i.e. they make their money when you issue preferred certificates and option grants.

          2. awaldstein

            understand that and i agree.i don’t think it is cheap though, i think it is smart.words matter and once you play the price game in thinking or in marketing you are racing to the bottom.

          3. William Mougayar

            so cheap is worse than free, and smart is better than all of them? but free or cheap are smart too, because it gets you in.i say- whatever gets the customer in the door, at the lowest possible hurdle is smart, whether it’s free or cheap.i don’t think our impulse psychology works by saying “it’s priced right, therefore I must have it.” but if something is free or dirt cheap, it’s easier to justify your entry point.

          4. awaldstein

            We just disagree.More than one way to build a business.Freemium is a very hard, very expensive model. In fact, a market model more than a business model.Whatever gets a customer in the door is a page out of Crazy Eddie’s book. It’s a transactional model, not a customer acquisition model.Just different ways to the center my friend.i like to sell. I like models that require you to sell cause they require you to understand who you are.

          5. William Mougayar

            What I’m saying is you may need both pricing strategies, if you have that latitude in your product offerings: Entry level pricing, then full-price for add-ons. hook them, then sell them. it’s a crowded and noisy market.In a perfect world, each product is priced right and generates equal profits, but it’s not always the case for small companies that want to grow.

          6. awaldstein

            Of course.I think of it from the other side that’s all.There is a market price that is right always. Invariably that price and margin from an operational perspective are completely out of whack for early stage companies.You always chose growth over profitability, customer acquisition over margin early on. In fact in almost all case, funding covers that delta. You can fix margin later.Price right now is what I recommend. And there is almost nothing harder in business than raising prices or adding costs to free. Trust me, been there and done that over and over and over again.

      2. ShanaC

        Hoe do you know what is priced right for anything

        1. Matt Zagaja

          Still trying to figure that out. You can look at analogous products and see what they charge if that information is available. But then who would have thought we’d have $17K Apple Watches that sell out after all the Android watches seem to top out below $1000.

        2. awaldstein

          Experience. Understanding your segment, your customer and where you are going with the product. Luck.

        3. James Ferguson @kWIQly

          You buy it

    2. JamesHRH

      Entry level.

      1. William Mougayar

        Really affordable/cheap entry level. If you have a price, don’t make cost an issue. The thin edge of the wedge in pricing.

          1. William Mougayar

            yes! Pricing strategy is a big deal, and it can hurt you if not done right, and in accordance with your market objectives.

    3. John

      Boy do you like to contribute with inane comments.

      1. fredwilson

        john – please try to keep things positive around her. insulting people is not how we go about the discussion on this blog

    4. ZekeV

      I don’t get the sense that eShares is competing against the free “pro se” formation. The platform seems to be set up to be mostly useful for companies that follow the series-style model, and would otherwise have to hire a relatively expensive human expert to implement any of this (or figure out how to use Clerky, which is harder than it should be). Folks who like to document their own corporate files will continue to do so, rather than pay a single $, and will continue to screw up their formation and cap tables royally every time. :)The current pricing for cap table services for startups might as well be free, compared to the cost of hiring a lawyer to do anything. But it doesn’t seem like it could be *enough* to make real money through cap table automation alone. Thinking about the most profitable possible client — a venture-backed startup that has a couple convertible rounds, maybe several series-style rounds, equity incentive plan, and active employee liquidity program. One-time fees for issuing these instruments through eShares is basically nothing, and the subscription 409A is $200/mo. I think we’re within the ballpark of $10k / year max value per user.I’m guessing that eShares hopes to be more valuable for the market-making, and perhaps other services, that can be bolted on once they have captured a large chunk of vc-backed private companies in their database. That is just my armchair speculation, all I know is what can be learned from kicking the tires for a few hours.

      1. William Mougayar

        I agree. That’s a pretty smart observation on your part. Indeed the best entry point is probably via the lawyers themselves, during the funding process, as a natural add-on service. But the retrofit market is probably huge, i.e. those that need fixing, and for those, they will probably look at a DIY vs. eShares approach, no? Or they wait til the mess is big enough, and a next round is approaching, then the clean-up crunch comes.

        1. ZekeV

          Their founders have talked a lot about opening up the market for private company liquidity, and they talk in terms of all private companies. But realistically, the service scratches an itch specifically for VC-backed companies (or those following the series-style financing model). They’ve been charging like $100 to onboard companies, which in my view doesn’t even pay for the salaries of eShares employees who manage that process. So they are making token amounts of $ on this right now. And to your point, yeah, why not just go out and raise more capital so they can onboard for free?

          1. Josh

            Zeke, you may find this interesting:…For the record, we used to give away our onboarding service for free, but we couldn’t get companies to sign up. :)Disclosure: product lead at eShares.

          2. ZekeV

            Yeah, I’ve read your cofounder’s posts. The value proposition is totally compelling for me. It’s a much better user experience than doing things manually, and it’s also harder to screw up and commit malpractice when the business logic is automated.It’s interesting that there’s resistance to using services like yours (and Clerky, and other automated solutions). I get that from clients as well, even when I’m telling them, possibly against my own interests, that it’s a good thing.

    5. James Ferguson @kWIQly

      Minimalium ?

      1. William Mougayar

        oy, my jaw hurt when i tried to pronounce it 🙂

        1. James Ferguson @kWIQly

          Ahhh – but I wrote tongue in cheek – no jaw problems – try itIf that works next week maybe I can “teach you to suck eggs” 😉

    6. Elia Freedman

      There’s no such thing. See Koppleman’s the penny gap. It’s either free or it isn’t. Given that for a business to drop $100… no big deal. But it definitely will have an impact on new start ups who don’t understand that they have a problem with their cap table yet. By the time they do it is a $1000+ investment to switch to eshares, it seems.

      1. William Mougayar

        well, there’s a bit of difference, because even at $100, you have skin in the game, and then they hook you in with the blades in the razor analogy (certificates etc..).same as when you have a free event, 50% of those that register don’t show up, on average. even if you charge $5, 90% will show-up.

        1. Elia Freedman

          I agree, which may be why they charge $100, but you argued for free, right? (I must be missing something this morning. Maybe you are arguing for a name that describes cheap? I see now how I misinterpreted. Sorry about that, William.)

          1. William Mougayar

            no prob. my bad. part of me was initially wondering why freemium wasn’t there – being a USV company 😉 ; but then i realized that cheapium is more appropriate in this case as Zeke pointed out the logic behind it.

        2. LE

          The “skin in the game” is super important. Also it signifies that a business transaction has occurred which generally means it was thought out and will be taken more seriously. The downside of course is friction and less sign ups. Not the $ so much but the action of having to pay something and use a credit card.Also more users (by way of free) means more support infrastructure and costs.

          1. William Mougayar

            less signups is OK, as the $100 weeds out the tire kickers which are the real drag on SaaS models.

        3. Matt Kruza

          A great way to do the $5 or minimal fee is to have it go to a charity. was at an event where the speaker for a pretty high priced personal development program (6 month program which wasn’t right for me), offered 90 minute consultation, didn’t want to make money off of it, but also didn’t want non-serious people, so $75 went to a wounded warrior type program. Loved the idea. Gets skin in the game, helps a good cause, and shows to customers all you want is the fact that you are serious, not like they are trying to make money off of it

          1. William Mougayar

            that’s a great idea.

    7. fredwilson

      i like your argument for free

    8. LE

      My vote would go for “nominium” or “nominalium”. I don’t even love those.

    9. Daksh

      That really really sounds Dirtium!

    10. Vasudev Ram

      Dimium? as in dime-ium? 🙂 As in nickel and dime (5 and 10 cents).Because $100 is to a company as a dime is to an individual.Also rhymes with neodymium (a soft silvery metal) :

      1. Vasudev Ram

        My 0.2 dimes 🙂

      2. William Mougayar

        it reminds me of Bitcoin denominations, like .3 BTC

  3. Chimpwithcans

    Hi Fred, in terms of marketing, can you point to use cases which can sell the idea more to us ahead of spreadsheets? Who is using this thing successfully so far? Has a network effect been created yet?

  4. JaredMermey

    What rules can one out in place for his/her cap table for when EShares becomes a marketplace? Can someone restrict secondaries? Can tag-along, drag-along rules be defined?Eshares seems most fascinating for its ability to become a pre-IPO marketplace a la Second Market but all the shares are already on the platform. I think this had been discussed before in the comments.

  5. David Barnes

    You show me a spreadsheet and I’ll show you a startup opportunity.

    1. fredwilson


    2. ShanaC

      What is something that should stay in a spreadsheet

      1. Matt Kruza

        Spreadsheets are AMAZING for quick / ad hoc analysis. I am professed lover of excel and pretty much can do about anything in it in my sleep so sure I am biased, but you can create self-contained (no external dependencies) analyses that can be sharable and easily edited in almost no time, and which all the person who is viewing it to perform there own analyses without messing anything up. Certainly not appropriate for certain tasks, but spreadsheets are the most used business productivity tool in last 30 years and likely for next 30 to come as well.

        1. Joe Cardillo

          Have to agree there, couldn’t in good conscience recommend executing core business operations via spreadsheet but I use it all the time to check correlation among variables and work up quick scatterplots to visually check for mean, outliers etc. There are simpler looking tools, but few that show their work as directly.

    3. Daksh

      I see Spreadsheet and see an opportunity

    4. Drew Meyers

      Is there a good startup that does all your financial/user growth model? Expected versus actual, forecasting, etc

  6. JamesHRH

    As is so often the case, not available north of the border.Looked into it the last time you mentioned them – seems like a great service.

    1. fredwilson

      Working on that.

      1. Henry Yates

        UK too please!

        1. stevewfindlay

          Henry- you may like – we’re based in the UK. And offer a similar service. Enjoy!

          1. Henry Yates


  7. John Frankel

    We are not an investors in eShares, but we certainly see the adoption in our portfolio and recommend such services for the reasons Fred outlines.

    1. fredwilson


    2. Josh

      Hey John, happy to see you recommending us. 🙂

  8. Mario Cantin

    I like how their call-to-action is clear and unambiguous. You either join or you don’t, but you’re not left with a ton of questions right at the onset. This is a great business actually.

  9. ZekeV

    I’ve just started using eShares for clients of my practice, and would like to do so more consistently. Founders are surprisingly resistant to services like eShares (and Clerky for that matter), which I think should be the go-to combo package for setting up a series-funded venture. Perhaps this is a function of pre-selection, i.e., that my clients are people who have already decided they are willing to spend a couple bucks on an attorney, and so are less interested in the cheaper and better options in automated services. But I think using an efficient attorney as a sort of eShares/Clerky concierge is worthwhile and can make the process go more smoothly.Using eShares as an adviser for other companies, I do run into some limitations. Mostly around capturing the complexity of non-standard financing arrangements. If you do anything that is a little different from vanilla — for example, have repayment terms on a convertible note other than a bullet at maturity — then eShares isn’t set up to capture that info in their schema (not last time I used it, anyway). However, I’m more than willing to advise people to give up certain bells and whisltes (which are superfluous in any case) so as to get maximum benefit out of this platform.As I’m sure they are aware, the subscription 409A valuation alone is a deal that cannot be refused for an early-stage company.

    1. ShanaC

      What do you do in not vanilla situations

    2. Josh

      Zeke, could you let me know when these limitations arise? [email protected].

      1. ZekeV

        Sure, happy to make direct feature requests! Feel free to ignore of course.

  10. JimHirshfield

    “Employees are the one who have the most to gain…” No doubt, and great to see something related to employee advocacy as it relates to ISO’s.I think the startup community has a long way to go on that front, as I’ve stated before. For instance, 90 days to exercise after you leave a company makes no sense to me… Less so with eShares so diligently tracking every issuance.It’s time to do the 7 year exercise period a la Pinterest.

    1. Joe Cardillo

      Totally agree. Happened and left a bad taste in my mouth, not something I want to do to someone who works their butt off for a couple of years and then leaves for any number of positive / fair reasons.

      1. JimHirshfield

        Exactly. And the only justification I’ve ever heard for this time constraint (90 days) is that it just makes it easier on the company to keep track of who has shares and options. Well….I think there are tools available to address that.

        1. Brad Kondracki

          It’s an IRS requirement for an option to be an ISO that it is exercised within 90 days of the employee leaving the company. Companies can choose to grant NSOs instead with longer exercise periods but then obviously employees lose the tax advantages associated with having ISOs.

          1. JimHirshfield

            Is that what Pinterest did when they extended the period to 7 years? I don’t remember the tax implications you refer to being mentioned in the news coverage.

  11. paulsethi

    Love it, but only 3-4 portfolio companies have adopted so far, hence limited engagement/interaction for me personally.V simple feature request, that would have me as angel, evangelize eShares to entrepreneurs raising (+ have the platform top of mind): allow investors/employees to upload [images of] their current physical stock certs, like a virtual storage locker. I have 50+ of them in a physical file cabinet, afraid of losing them.

    1. pointsnfigures

      from the investor point of view, if every company was on there I have a dashboard to look at everything. Much better than the damn Excel sheet I have now.

      1. Josh

        Hey guys, I lead product at eShares. We should talk. Could you shoot me an email? [email protected].

    2. fredwilson

      great idea. will share

    3. christmasgorilla

      Angels and lawyers need to evangelize.It’s a nice feature idea.I’m a fan of the idea of eShares and have had to scramble to find non-existant stock certs in the past.One of the biggest issues is that the big startup law firms are still actually pretty “against” eShares—which includes Gunderson (which is weird because both USV and Spark are big customers of theirs). When I asked our counsel about moving over (we’re a post Series B company with a clean cap table, but busier than a younger company) the response I got indicated a large amount of friction.

  12. Matt Zagaja

    I would probably use this if I owned a start-up and needed to issue shares. The backend business innovation going on in the start-up world is great. I have a small consulting firm we setup as a partnership and we use Expensify to track all the mileage and expense reimbursements. Less headaches, more time to innovate or sell.

  13. pointsnfigures

    I recommend it to everyone starting a company. What’s interesting is I usually get the same response you get. “Excel is fine.” Until it’s not. I recently went through a cap table redo. It took a long time to get right-and it cost legal fees to make sure it was right. There is so much going on in Fin Tech today. Lots of cool companies and lots of places to create value.

    1. LE

      There is almost certainly a way marketing wise to head off that typical “excel is fine” at the pass. A similar problem exists in many situations where people don’t see the need for something until they have had a particular experience and can relate to some pain or desire as a result.The other issue of course is that Fred seems to indicate that this is more of a problem for employees than it is for others involved (company and investors). So the question is how do you motivate companies to care enough about something that (from what I am reading) is not a problem for them or at least not a big problem?

      1. Joe Cardillo

        From a marketing / illustrating the problem perspective, be cool if they did something interactive like but that also showed all the messed up stuff that could happen. Or some other way to make it interesting for people to go from “I’m fine I don’t have a problem” to “yikes I didn’t think of that.”

    2. awaldstein

      Surprised.I’m an excel junkie but there is almost no one i know from teenagers in my extended family to clients who has not switched to Google Docs.Sending files around is just a pain.I still model on Excel but share everything in a doc.

  14. Guest

  15. Sam

    Initial reaction… Surprised to see USV investing here. Definitely a market need, and I could see as an angel investment, but it seems like the market is too niche. VC did less than 4500 deals in the US last year according to the previous blog post (PWC / NVCA). At a reasonable pricing structure, wondering if this is a small investment / 10x return / small dollar return? Perhaps I’m not thinking creatively enough about how this can be monetized.

    1. fredwilson

      there is no reason this has to be limited to VC backed companies

    2. Guest

      I assume that this is a big data or registrar (DTC) play. Cap tables are a means to an end. If eShares can help improve cap tables – good, but I do not think it is their primary mission – too small a market (niche as you say). Bigger opportunities become available once they get everyone’s cap table (and data) onto their system -which is where it gets interesting…..

  16. sbmiller5

    An underrated benefit of eShares is getting rid of option paperwork. I recently wrote: “Combining eShares with Zenefits & Zenpayroll has completely removed my need for employee paperwork.” No more filing or scanning to dropbox.… /what-s-your-finance-operations-stack-c56bbd19529e

  17. LE

    Having the right tool for the job is a lesson that I Iearned early on in business with respect to machinery and later of course software. You can’t use 3 slow machines in place of 1 fast machine. You need the right tool for the job. (Ditto with repairs and actual “tools”).I am always amazed how people and companies use spreadsheets for things that they were never intended to do. There is typically no audit trail with a spreadsheet and it’s unfortunately super simple and all to easy to change a cell and have things be incorrect from that point on.

  18. ErikSchwartz

    Thanks. The timing is good on this for me.

  19. Ian Sigalow

    We promoted eShares to our entire US portfolio, which is about 50 active companies, and have had over a third sign up so far. Fred’s post doesn’t mention the two best value propositions. First, they helped us coordinate all the ASC 820 reports (formerly called FAS 157) at the end of the year. Second, they offered 409A services for our portfolio companies at a very competitive rate. We figure that our portfolio companies have saved on the order of $50K in just the past few months, and this number will be even larger as the year goes on. I can’t recommend the service any more highly.

    1. JLM

      .Very compelling argument.JLMwww.themusingsofthebigredca…

  20. cameomike

    Oh what I would have given to have eshares back in 2010 when we started up.

  21. Douglas Hanna

    We have been using eShares at my company since day 1 (August 2014) and they have been very easy to work with. They were super helpful in getting us set up and the UI/capabilities seem to be very solid. I was initially attracted to them because of the 409a as a service capabilities and figured a 409a would cost at least as much as eShares did per year, so I was getting the cap table management aspect for “free.”

  22. JLM

    .A CEO should, at any instant in time, be able to know his total authorized shares, shares issued, shares outstanding (not the same thing as shares issued), treasury shares, options issued, options in the money, options out of the money, undiluted shares and fully diluted shares.I am not suggesting this should be memorized but should be prominently in the corporate minute book of that company snuggled up close to it articles of incorporation, corporate by laws, corporate resolutions.This is an essential record for any corporation and, if absent, might substantiate a charge based on “piercing the corporate veil.” A topic for another day.The minute book should also include the option plan under which the options have been authorized — a copy of the board resolution authorizing it would be nice — and issued.This is just simple corporate record keeping. Something in which startup CEOs are understandably thinly grounded but it is pretty simple stuff, really.Services like eShares are a good thing to streamline process but I would be a little leery about substituting them for sound record keeping. Today, it is possible to digitize all of this and to make the documents (option plan, grant of option, acceptance of grant, exercise of grant, etc.) searchable.This is also the type of record that should be held in a digital off premises form as both an exercise in continuity but also a security issue.A savvy VC or boardmember should have a checklist containing this info at their fingertips and should give it to a new CEO when they first meet.JLMwww.themusingsofthebigredca…

  23. JLM

    .<begin rant=””>Excel is coming in for a beating today.I was in business before the invention of Lotus 1-2-3, Visicalc and Excel. We used to run numbers on green and white accounting paper.When you did a ten year projection, you taped sheets together. When you made a mistake, you used something called “white out.”Everyone should be an Excel wizard. It is like learning to speak English.All hail mighty Excel!<end rant=””>JLMwww.themusingsofthebigredca…

    1. LE

      I actually trained myself to use an adding machine, without looking, by touch.Came in tremendously handy when having to add up long lists of numbers. Much faster than looking at keys and also greatly reduces and eliminates errors since your brain is in a trance and on autopilot. In this day and age, they’d call that “a hack”.

  24. rtolmach1

    Sure fills a need, but I think they are needlessly scaring away a lot of potential clients. We are launching a new venture, so I contacted via chat to ask if the cost is less than $100 for brand new companies that have not yet issued anything. They explained that $100 is an onboarding fee to onboard an existing cap table and that there is no $100 fee for a new company that does not yet have investors or anything. That makes sense. Seems like a mistake not to say so on the website. The nice chat lady said it is rare that a company starts on eShares with a brand new cap table. No surprise: all the cash-conscious new companies look at the site, see the $100, do not see “Free for new companies,” and so they do not sign up. Seems that they are needlessly scaring away a big chunk of their market.

  25. Saul_Lieberman

    Fred, “You’re gonna make mistakes” doesn’t seem to deliver. “Excel is so 1900” doesn’t seem to work either. We can try to figure out why not. (Too conclusive/dismissive?). But you need to move on to other ways to explain the value proposition.

    1. LE

      Agree tone like that is dismissive and parental at least in the context of trying to sell something. Of course Fred isn’t creating their marketing only writing a blog post.

  26. William Mougayar

    Interesting, I just became a user of eShares. Just got a certificate notification email for one of the companies I invested in. Good timing!

  27. mikenolan99

    I see tremendous value in this! And, it would be great to use in demo mode for an entrepreneurship class… cap tables are notoriously hard to teach.

  28. someone

    I teach an MBA course on selecting cofounders & splitting equity – will be sure to mention

  29. AB

    As an auditor of both VC Funds and portfolio companies I can definitely say that some cap tables are in a miserable state. This really becomes an issue during our review of investment existence and valuation assumptions. What makes the situation worse is that no one wants to admit that they are wrong. It looks bad for the VC to say they don’t know what they own and it looks worse for the portfolio company to say “we’ll take your money, but tracking your position… ehhh… that might tough”.

  30. Guest

    eShares and other tools/platforms out there (and there are many more than you think) are great and certainly a step up from Excel but most problems with messy cap tables do not come from the tool (spreadsheets) but the people inputting the data. So if you truly want a better cap table, certainly upgrade to a cloud-based platform but work with a company that is focused on customer service and beware of companies that are really after your data. I would recommend talking with your legal counsel (who understand this problem well and actually have to rely on cap table data for their legal documents) to find a firm that you can trust and make sure they have great customer support. Good luck!

  31. Guest

    The 409A subscription service is a very attractive one….until you think about why you are paying Gunderson or Cooley for legal advice when eLaw (made-up name) if offering an inexpensive subscription service for legal advice. You get what you pay for. Valuations are relatively straight-forward for early stage companies but getting them wrong will end costing you multiples of any savings when they are scrutinized. Better to find a competent and experienced 409A firm early who can work with you through an exit (whether sale or IPO). The fee you pay early on may seem high for a startup but will be peanuts (compared to the benefits) as your company matures. The valuation exercise is more nuanced than you think. Beware that this is “compliance” valuation which is a very different animal than valuation in an investment or M&A context; the players are different (auditors, SEC, IRS) and you would be surprised (and incensed) at how different some of the techniques and approaches are. The subscription service is like the term “post-money”, it seems right initially but upon further analysis, is incorrect; it is a simplification (everything is common stock) and places zero value on all the rights and preferences you just gave up in raising money through preferred stock.