A larger cheque for 7%
US$150,000 for 7% against a US$75,000 equity-free award, with later rounds halving the programme’s stake before an exit.
Break-even at an exit of US$2,142,857. Above that, the grant is the better money.
Tools
Equity or equity-free?
Enter the equity deal and the grant. The break-even is the exit value at which the stake you give away is worth exactly the extra cash it brings.
The two offers
Where the two offers cross
- Break-even exit value
- US$2,142,857
- Programme's stake at exit
- 3.5%
- Extra cash from the equity deal
- US$75,000
The equity deal brings US$75,000 more now and costs 3.5% of the company at exit. Below an exit of US$2,142,857 the extra cash is worth more than the stake; above it, the grant leaves the founders better off.
Money only: no tax, no time value, and nothing for mentoring, network or the conditions a grant may carry.
| Exit value | Stake is worth | Equity deal ahead by | Better off with |
|---|---|---|---|
| US$500,000 | US$17,500 | US$57,500 | The equity deal |
| US$1,000,000 | US$35,000 | US$40,000 | The equity deal |
| US$2,500,000 | US$87,500 | −US$12,500 | The grant |
| US$5,000,000 | US$175,000 | −US$100,000 | The grant |
| US$10,000,000 | US$350,000 | −US$275,000 | The grant |
| US$25,000,000 | US$875,000 | −US$800,000 | The grant |
| US$50,000,000 | US$1,750,000 | −US$1,675,000 | The grant |
| US$100,000,000 | US$3,500,000 | −US$3,425,000 | The grant |
| US$250,000,000 | US$8,750,000 | −US$8,675,000 | The grant |
| US$1,000,000,000 | US$35,000,000 | −US$34,925,000 | The grant |
How the comparison works
An equity deal gives you cash now in exchange for a share of whatever the company is worth later. A grant or an equity-free programme gives you cash with no share attached.
The difference between the two cheques is what the equity buys you now. Its price is the programme’s stake at exit multiplied by the exit value, so it grows with the company.
The break-even exit value is the extra cash divided by the stake at exit. US$75,000 more for a stake that ends at 3.5% breaks even at US$75,000 ÷ 3.5% = US$2,142,857. Sell for more than that and the equity was the expensive money.
Later rounds dilute the programme’s stake like everyone else’s, which lowers its price at exit. Both offers are assumed to face the same later rounds.
This is money only. An equity programme may bring investors, customers or a demo day that changes what the company becomes; a grant may restrict what you spend it on, need matching funds or ask for reports. Weigh those yourself.
Worked examples
Each one is worked through with the same maths as the calculator. The first is what the calculator shows when it loads.
The grant is larger
US$50,000 for 5% against a US$60,000 grant. No exit value makes the equity deal the better money.
The grant is ahead at every exit value.
No later rounds
US$125,000 for 7% against a US$15,000 grant, assuming the company never raises again before it is sold.
Break-even at an exit of US$1,571,429. Above that, the grant is the better money.
Questions about this calculator
Is an equity-free programme always the better deal?
Not on its own. Equity-free money costs nothing at exit, but equity programmes often invest more and may open doors a grant does not. The calculator shows the price of the equity in money; whether the rest is worth it is your call.
What does the break-even exit value tell me?
How large a sale has to be before the stake you give away is worth more than the extra cash the equity deal brought. If you expect to build a company worth more than that, the equity is the more expensive money.
Why does later dilution matter?
Each later round shrinks the programme’s stake along with everyone else’s. A 7% stake diluted by half is 3.5% at exit, which halves its price and doubles the break-even exit value.
What if the grant has conditions?
Many do: spending rules, reporting, matched funding or a fixed project. The calculator compares cash only, so subtract anything the conditions cost you from the grant before you enter it.
Related
See what programmes actually offer
The deal terms table lists every programme that publishes what it invests and the equity it takes.