Checklist: Before You Give Away Equity | Business Operating Manual

I know the pre-money valuation (the business's worth before the new money goes in) and can explain how it was calculated.

I have calculated the post-money valuation (pre-money + investment).

I have calculated the exact percentage the investor will receive, using post-money valuation, not pre-money.

I know whether the shares are ordinary or preferred, and what that means if the company is sold.

I know whether the shares come with voting rights.

I know whether the investor expects dividends, and how often.

I have discussed what happens if the investor wants to exit (see Lock-In Periods and Exit Windows).

I have discussed what happens if either party dies.

I understand, and the investor understands, that money invested as equity may never come back if the business fails (see What Happens If the Business Fails?).

I have updated (or created) my Cap Table with the new numbers.

I have used the Ownership Percentage Calculator to double-check the math myself, independently of the investor's numbers.

I have this reviewed by a lawyer or qualified professional before signing.

I have a signed Shareholders' Agreement on file (see Legal Agreements · Template).

I have asked the investor the fourteen due diligence questions and written the answers down.