Let's now go to look at how the cap table work for a series A investment, but where those series A investors have required an ESOP be set up to retain and attract our key employees, which represents 10% of the business post-investment. We need to deal with this in two stages. First of all, allocating shares to the ESOP, which are grossed up so that when we secondly allocate new shares for the series A capital itself, we then get back to 10%. So we need to take the 10% that we want to end up with for the ESOP for this series A allocation and divide it by 1 minus the seed capital investment, a percentage 20% here, which means we want to allocate shares to the ESOP such that at this stage they have 12.5% of the equity of the business, so that when they're diluted, subsequently they get back down to the desired 10%. This is going to leave the existing shareholders with 87.5% of the business after new shares are created given to the ESOP to equate to 12.5% of the business. Now, this isn't so bad to calculate if we're just looking at percentages, but in terms of calculating the number of shares to be allocated, it is more complicated because we haven't yet decided how many shares are going to be issued to the Series A investors. And we end up with a bit of a circular calculation in that the number of shares we issue to the ESOP impacts on the price per share implied before the series A funding takes place, which therefore has an impact on how many shares need to go to the series A funding. So we're gonna have to pick up the number of shares that we've got for each of these individual calculations as they were before, but we're going to have to come back to the number of shares we're gonna give to the ESOP. We're gonna have to solve for this at the end using a Excel function. I do want to include in my total calculation for now, and I also wanna calculate my stake percentages, what stake we have in the equity of the business. We'll lock onto by hitting F4, the total number so that we can prove this is all working for us.

Okay? So at the moment, we haven't created any new shares to give to the employee stock options. We can play around with this later on, but we're gonna go to the next stage to prove why this is gonna be complex for us. Okay? So assuming that all the calculations are set up here, we'll get a number into that yellow cell eventually, but let's go on to see what would happen then for the series A financing itself, the series A financing is $7.5 million, which is gonna be in exchange for 20% of the shares of the company. So let's go through the valuation implications of this. Well, if $7.5 million is equivalent to 20% of the company, the whole company is going to be the 7.5 divided by 20% to give us an overall valuation for the business at this stage. So somewhere further down the route than the seed investment of 37,500,000, the existing investors before the series A investment must therefore have shares in the company that are worth 30 million. And the number of shares that we have in the company at this stage, well, I haven't yet determined it because I haven't thought about how many shares need to be issued for that ESOP, but I'm just gonna pick up cell D66 for now, and that'll give me the 2,222,000 number. This gives me an implied share price at the moment of 13.50. And therefore, if we've got a share price of 13.50, that will not only be for the existing shares, but also for the new shares that we're gonna give in exchange for the 7.5 million investment. So if we've got 7.5 million being invested in the company where the shares are worth 13.50, that would mean at the moment that we need to create 555,000 new shares. Okay? So we've still gotta see how many shares we want to actually allocate to the ESOP at the first step. But let's go off and finish off what the cap table will look like for the series A investment. What we've got here again, is four separate investments. We've got an angel investor, but also a number of venture capital funds being invested here as well. So they've got different ownership stakes here, so let's just see how many shares they're gonna get as a result of that. Given the number of shares that we've calculated so far. All these numbers will update in a second, but let's just leave it that there for the time being. So the 555,000 shares multiplied by the ownership stakes, I then need to go and lock onto the C75, which means I can then copy this down to get the number of shares to each investor, and the investment amount is gonna come from the number of shares they're getting multiplied by the implied share price, which if we lock onto the share price and then copy this down, should get us back to the number we have first thought of the 7.5 million being invested into the company. Final step we've gotta do with regards to the series A investment is to set up the cap table in totality. So we wanna pick up the number of shares that each investor's got. We can pick that up for the co-founders and the early employees and the seed investors from our earlier sets of calculations.

And for the series A investors, we can calculate this from the series of calculations we've just gone through. The stock options I'm gonna pick up this number from the table above up in row 65 and it's zero at the moment.

And what I want to do is, again, calculate all of our stakes by looking onto the total number. We're now at a stage where we can think about calculating and populating this ESOP number. What I want is 10% at the end here. I wanna get there by calculating how many shares we will need up here that represent 12.5% in the business. So what I wanna do is to use the solver function. And the way that I'm gonna do that is by first of all, going to the data tab, so alt and a. Now, over here on the right hand side, I've got the solver function. You may not have that. The way that you can get it is by going to file. And then down the bottom left hand side options.

And then within this Excel options, you need to go to add-ins. And then down the bottom here, again on Excel, add-ins, hit go. And then just check the box or tick the box here for the solver, add-in. This will put this in here for you. Once you've got that there, what we need to do is to calculate the number of shares so that what we have in total is 12.5% of the shares of the company. So I'm going to hit ALT A and then Y2 for the solver.

And what I need to say is that I want my cell E65 to be equal to 12.5%, 0.125, and I wanna change the number of shares that we have here in D65. This will work for us because this is added into the total number of shares that we have in C73, which then goes through to the weightings of shares that we have thereafter. So if we solve, we'll get a message that this has helped us out, and then we just need to hit okay, and that number is in there for us.

We are getting 12.5% of the shares being owned by the employee stock options if we give them 317,461. And then if we go down to the rest of the calculations, you can see that that 317,461 equates to 10% of the equity of the company after the series A investment has taken place, which is what we wanted to get to all along.

In addition, you can see the share price has dropped from 1350 down to 1181 as there were more shares in issuance before the series A injection took place. And as a result, a lower price per share. As a result, we've had to create more shares than the 555,000 that we had before to give to these series A investors to represent the 7.5 million investment into the company. The final step here is to pull all these numbers through to the complex cap table. So in terms of tying the numbers up, we can see that in terms of these series A investors, V Kovax was one of our angel investors. So V Kovax also injected some more money, 500,000 at the series A stage, and they got some more shares for doing that. 40, 41,000 shares. Park Place, they injected 3 million at series A, which is represented by the 253,000 shares.

Broadway Venture partners, they injected 2.5 million represented by the 212,000. And then Marvin Gardens is the next road down. So I can just hit Control D to copy that down for us.

We need to get all of these numbers across to the totals as well. So for V Kovax, the total capital isn't just from the seed round. I want to add on to that, what they did for us at the series A round as well, and therefore, the total number of shares. I also want to add on the 41,000 shares that we gave them in the series A, because we've got zeros everywhere else, we can just copy this straight down and that will give us the right numbers for the other seed A investors. We also need to pick up the number of shares that were allocated to the ESOP for this series A investment, which we can just grab from our solver calculation, the 317,000. This gets us back to the ESOP for the series A, having 10% of the shares in the business, which is exactly what we were looking for. The final thing that we can do at this stage is to set up the implied post money valuation for the company. Because we do now have a share price for the company. So if I go up to G8 and pick up that implied share price of 1181 per share, I can then say up in the top right hand side that we've got 1181 per share. And if I multiply that by the total number of shares that are either in issuance or been allocated to the ESOP, that'll get us to the 37,500,000 valuation of the company.