Due Wednesday, September 23, 2026 at 1:00 pm on Canvas — one submission per group (2–4 students). Upload the HTML file this workbench generates (PDF also accepted).

The assignment

Two founders start a company, take in an angel, raise a Series A with an option pool, and come back for a Series B. Over four parts you will build Houzz's capitalization table from formation through Series B, watch each round dilute the founders, test how negotiating the option pool and the valuation changes the outcome, and then advise the founders in a short email.

Everything you need is given in each part's story — you supply the share counts, prices, and reasoning; the site totals shares and computes ownership % for you. Worth 40 points across Parts I–IV (18 · 10 · 8 · 4).

Group setup

Enter every group member. The syllabus requires groups of 2 to 4 students, so you need at least 2 and at most 4 names.

How this workbench works

  • Structure, not answers. The site formats cap tables, computes ownership % from your share counts, and warns about unbalanced journal entries — it never tells you if an answer is correct.
  • Numbers only. Type 12 or 1500000. Do not type $ or %. Share counts add commas when you leave the cell. Percentage and dollar fields show the unit on the right of the box.
  • Autosave on this device only. Progress saves to your browser every few seconds. Use Export/Import to share work within your group.
  • No data leaves your computer. Nothing is uploaded or tracked. Verify in DevTools: zero network requests on this page.
  • Excel is optional. Scratch work is fine in Excel or on paper; submit via the generated HTML file. Generate will list any blank sections before it downloads the file.

Rounding and precision

Your numeric answers are compared against an answer key with a narrow tolerance. Report each figure at the precision below.

  • Share counts: exact whole numbers. Every share figure in this problem set resolves to a whole number. If yours does not, the error is upstream in your cap table — find it rather than rounding it away.
  • Dollar amounts: two decimals. Report price per share to the cent. Write 7.25, not 7 and not 7.2531.
  • Percentages: one decimal. Write 23.4, not 23 and not 23.41. The ownership percentages this site computes for you already use one decimal, so your typed answers should match what you see on screen.
  • Round only at the last step. Carry full precision through your intermediate math and round only the number you type into the box. Rounding partway through will push your later answers outside the accepted range.

Part I — Formation through Series A 18 pts

Houzz started as a fix for its founders' own headache. Mid-remodel and buried in contractor bids and paint swatches, Katy Perry and Snoop Dogg built a web app to tame the chaos — mood boards, a directory of vetted pros, and a marketplace for the furniture people actually wanted. The side project caught on, and one spring they incorporated, walked away from their day jobs, and split the company down the middle: each founder put in $30,000 for 600,000 common shares.

You are Houzz's first finance hire. Your job is to build the cap table on day one and keep it honest as the company raises three rounds of capital — watching what happens to the founders' ownership at each step.

Seed. Growth outran the founders' savings inside a year. Mark Cuban — an early believer who had used the product himself — comes in as the first outside money, investing $1.5M at a $7.5M post-money valuation ($6.0M pre-money).

Series A. Eighteen months later, with usage compounding and a hiring plan to fund, Greylock Partners leads a $12M round at a $50M post-money valuation. The term sheet requires a 16% unallocated option pool after the round (fully diluted, carved from the pre-money). Mark Cuban exercises his pro-rata right for 20% of the Series A check; Greylock takes the rest.

(a) Founding round

Record the journal entry and build the initial cap table. Two Common Stock credit rows are pre-filled, one per founder. Split each $30,000 or combine into one $60,000 credit. Either is fine if the entry balances.

(b) Series Seed — $1.5M on $7.5M post

With traction but an empty bank account, the founders take Cuban's $1.5M check. Record the journal entry, update the cap table, and work out the round's valuation split, price per share, and the founders' new combined stake.

(c) Series A — $12M on $50M post, 16% option pool

This is where it gets interesting: Greylock's term sheet bakes in a 16% option pool carved from the pre-money — and someone has to pay for it. Build the round, and see what the pool does to the founders.

Include the unallocated option pool as a separate row. Greylock = 80% of Series A dollars; Mark Cuban = 20%. Two Series A Preferred credit rows are pre-filled so you can split the $12M by investor. Combining them into one credit is also fine. Creating the option pool is not a journal entry.

Part II — Negotiating the option pool and valuation 10 pts

The night before signing, Katy asks whether they can do better. The Series A investment stays $12M, but the founders push on two levers: the option pool size and the post-money valuation. Work three scenarios — a smaller 12% pool, a higher $60M valuation, and both together — each starting from your Part I Series A cap table. Each scenario is independent; edit freely.

Complete all three tabs below. The comparison table and judgment questions come after the tabs; they need numbers from every scenario.

Scenario comparison

Fill in your results for each scenario (one row per metric). Enter the number only; the unit is on the field.

Metric Smaller pool (12%) Higher val ($60M) Both levers

Judgment questions

A member of the teaching team reads and grades this answer. There is no required format or word count, and no exact wording is being matched — make your reasoning clear and support it with your own numbers.
A member of the teaching team reads and grades this answer. There is no required format or word count, and no exact wording is being matched — make your reasoning clear and support it with your own numbers.

Part III — Series B and pool top-up 8 pts

A year on, Houzz is a real business and the checks are bigger. Series B: Houzz raises $27M at a $105M post-money valuation. Sequoia Capital leads with $18M; Greylock follows on with $9M. After the round, unallocated options must equal 12% of fully diluted shares.

Start from your Part I Series A cap table (the signed 16% deal). Since then, of the 400,000-share option pool, 80,000 options have been granted (allocated and outstanding) and 320,000 remain unallocated. The Series B top-up is carved from the pre-money, just like the Series A pool.

Stretch

A member of the teaching team reads and grades this answer. Credit here is for the method you show, so write the equations out in whatever form is clearest. Your final figures still belong in the numeric boxes above, where the rounding rules apply.

Part IV — The founder email 4 pts

Write an email to Katy and Snoop (max 5 sentences): given your Part II analysis, should they negotiate for the smaller pool, the higher valuation, or both — and who pays for the pool either way?

A member of the teaching team reads and grades this email. The five-sentence limit above is real and is part of the grade; within it, write in your own voice.
0 sentences

Review & submit

Check the list below, then generate your submission file for Canvas. If anything is still blank, Generate will name it before downloading.