Founders Handbook

---
name: founders-handbook
description: "Answer founder questions from 1984 Ventures' public Founders Handbook, with a link to the chapter behind every answer. Use for picking a startup idea, choosing or parting ways with a co-founder, cap tables, dilution and option pools, SAFEs (pre vs post-money, SAFE vs priced round, side letters, conversion math), monthly investor updates, Series A decks and Series A dilution, secondaries, structured or down rounds, selling the company (M&A process, legal prep, deal structure, deal terms), QSBS, seed-stage engineering practices, and open source content marketing or telemetry."
---

# Founders Handbook

This skill distills the 1984 Ventures Founders Handbook
(https://1984.vc/docs/founders-handbook) and routes each question to the right chapter.
It is a derived summary made by GetEdge, not 1984's text and not endorsed by 1984.
The handbook's authors are named per chapter below. Credit 1984 Ventures and the author,
link the chapter, and do not present the material as original. Every figure in these
files comes from the chapter text; do not invent numbers or fill gaps with market
averages.

## Route the question first

Match the ask to a row, load that reference file, answer from it, and cite the chapter
URL. If the ask spans rows, load each file. If it matches none, say the handbook does
not cover it instead of stretching it.

| Founder asks about | Chapter (author) | Load |
| --- | --- | --- |
| picking a startup idea, market choice, AI automation positioning | [How to Pick a Startup Idea](https://1984.vc/docs/founders-handbook/how-to-pick-a-startup-idea) (Samit Kalra) | [company-formation.md](references/company-formation.md) |
| finding, evaluating or contracting with a co-founder | [Choosing Your Co-Founder](https://1984.vc/docs/founders-handbook/choosing-your-co-founder) (Taylor Ford) | [company-formation.md](references/company-formation.md) |
| a co-founder leaving, separation package, what happens to their equity | [How to Part Ways with Your Co-Founder](https://1984.vc/docs/founders-handbook/cofounder-departure) (Ramy Adeeb), [Founder Departure Impact on Cap Table](https://1984.vc/docs/founders-handbook/founder-departure) | [company-formation.md](references/company-formation.md) |
| cap table basics, priced round math, option pool, employee grants | [Cap Table 101](https://1984.vc/docs/founders-handbook/cap-table-101) (Ramy Adeeb) | [cap-table-and-safes.md](references/cap-table-and-safes.md) |
| what a SAFE is, SAFE terms, SAFE conversion math | [Introduction to SAFEs](https://1984.vc/docs/founders-handbook/intro-to-safes) (Ramy Adeeb) | [cap-table-and-safes.md](references/cap-table-and-safes.md) |
| pre-money vs post-money SAFEs, stacking SAFEs | [Pre-money vs Post-money Conversion](https://1984.vc/docs/founders-handbook/pre-money-vs-post-money-conversion) (Ramy Adeeb) | [seed-round-terms.md](references/seed-round-terms.md) |
| SAFE or priced round | [SAFE vs Priced Round](https://1984.vc/docs/founders-handbook/safe-vs-priced-round) | [seed-round-terms.md](references/seed-round-terms.md) |
| side letter asks: pro-rata, MFN, major investor, observer seat, info rights | [SAFE Side Letters](https://1984.vc/docs/founders-handbook/safe-side-letters) (Ramy Adeeb) | [seed-round-terms.md](references/seed-round-terms.md) |
| monthly investor update format | [Monthly Investor Updates](https://1984.vc/docs/founders-handbook/investor-updates) | [seed-round-terms.md](references/seed-round-terms.md) |
| Series A deck, slide feedback, growth forecast, round size | [How to Nail Your Series A Deck](https://1984.vc/docs/founders-handbook/series-a-deck) (Samit Kalra) | [series-a-deck.md](references/series-a-deck.md) |
| Series A dilution, pool refresh, seed pro-rata at the A | [Impact of Series A on Cap Table](https://1984.vc/docs/founders-handbook/raising-your-series-a) (Ramy Adeeb) | [series-a-and-later.md](references/series-a-and-later.md) |
| reducing dilution, negotiating the lead's ownership or the pool | [Minimizing Founder Dilution](https://1984.vc/docs/founders-handbook/minimizing-founder-dilution) | [series-a-and-later.md](references/series-a-and-later.md) |
| founder liquidity, selling secondaries | [Selling Secondaries](https://1984.vc/docs/founders-handbook/selling-secondaries) (Ramy Adeeb) | [series-a-and-later.md](references/series-a-and-later.md) |
| flat or down round, structure, liquidation preferences, anti-dilution | [Structured and Down Rounds](https://1984.vc/docs/founders-handbook/structured-and-downrounds) | [series-a-and-later.md](references/series-a-and-later.md) |
| selling the company, acquirer conversations, banker, LOI, investor approval | [How to Sell Your Startup](https://1984.vc/docs/founders-handbook/mergers-and-acquisitions/how-to-sell) (Ramy Adeeb) | [selling-the-company.md](references/selling-the-company.md) |
| M&A counsel, sell-side diligence, data room, signing and closing | [Legal Considerations for M&A](https://1984.vc/docs/founders-handbook/mergers-and-acquisitions/legal-considerations) (Assaad Nasr, guest) | [m-and-a-legal-and-qsbs.md](references/m-and-a-legal-and-qsbs.md) |
| asset vs stock deal vs merger | [Structuring M&A](https://1984.vc/docs/founders-handbook/mergers-and-acquisitions/structuring) (Assaad Nasr, guest) | [m-and-a-legal-and-qsbs.md](references/m-and-a-legal-and-qsbs.md) |
| earnout, escrow, reps and warranties, indemnification, covenants | [Terms to Negotiate in an M&A Transaction](https://1984.vc/docs/founders-handbook/mergers-and-acquisitions/terms) (Assaad Nasr, guest) | [m-and-a-legal-and-qsbs.md](references/m-and-a-legal-and-qsbs.md) |
| QSBS, 83(b), buy-backs and the redemption trap | [QSBS for Early-Stage Founders](https://1984.vc/docs/founders-handbook/taxes/qsbs) (Mark Percival) | [m-and-a-legal-and-qsbs.md](references/m-and-a-legal-and-qsbs.md) |
| seed-stage engineering: testing, reviews, CI, AI tooling, 30-day plan | [Engineering Best Practices at Seed Stage](https://1984.vc/docs/founders-handbook/eng/best-practices-seed) (Mark Percival) | [seed-engineering.md](references/seed-engineering.md) |
| open source go-to-market, "alternatives to X", comparison content | [The Open Source Content Marketing Playbook](https://1984.vc/docs/founders-handbook/eng/open-source-playbook-posthog) (Mark Percival) | [seed-engineering.md](references/seed-engineering.md) |
| telemetry in an open source project | [Why Your Open Source Project Needs Telemetry](https://1984.vc/docs/founders-handbook/eng/open-source-telemetry) | [open-source-telemetry.md](references/open-source-telemetry.md) |

For modelling a real cap table, point the founder to 1984's open-source Cap Table
Worksheet (https://startup-finance.1984.vc), the handbook's "Tools" section.

## The cap table and SAFE math, as a runnable procedure

When the ask is numeric (a raise, a pool, a conversion), compute, do not paraphrase.
The handbook's core identities:

- Price Per Share (PPS) = pre-money valuation / pre-money capitalization (shares before the round).
- New investor shares = investment / PPS.
- Dilution = new shares issued / fully diluted shares (FDS) after the round.
- Post-money = pre-money + investment = FDS after the round * PPS.
- The cap table always sums to 100 points. New ownership comes out of existing ownership.
- A post-money SAFE converts at the lower of two PPS values: cap / company capitalization,
  or round pre-money / company capitalization. Company capitalization includes the SAFE
  shares themselves, so the calculation is recursive.

Worked procedure, matching the handbook's own example ($2M post-money SAFE at a $10M cap,
then an $8M Series A at $32M pre / $40M post, on 2,000,000 founder shares):

```python
def priced_round(pre_money, investment, pre_shares):
    pps = pre_money / pre_shares
    new_shares = investment / pps
    fds = pre_shares + new_shares
    return {"pps": pps, "new_shares": new_shares, "fds": fds,
            "dilution": new_shares / fds, "post_money": fds * pps}

def safe_conversion(safe_amount, safe_cap, round_pre_money, round_investment, base_shares):
    # base_shares = issued stock + unissued options, before any SAFE shares
    # SAFE ownership fraction before the round: f = safe_amount / safe_cap
    f = safe_amount / safe_cap
    # Recursive solve: company_cap = base_shares / (1 - f)
    company_cap = base_shares / (1 - f)
    pps_safe = safe_cap / company_cap
    pps_round = round_pre_money / company_cap
    pps = min(pps_safe, pps_round)          # SAFE converts at the lower PPS
    safe_shares = safe_amount / pps
    round_shares = round_investment / pps_round
    fds = company_cap + round_shares
    return {"company_cap": company_cap, "pps_safe": pps_safe,
            "pps_round": pps_round, "converts_at": "cap" if pps == pps_safe else "round",
            "safe_shares": safe_shares, "round_shares": round_shares, "fds": fds}

# Handbook example: 2,000,000 founder shares, $2M SAFE at $10M cap, then $8M at $32M pre
safe_conversion(2_000_000, 10_000_000, 32_000_000, 8_000_000, 2_000_000)
# {'company_cap': 2500000.0, 'pps_safe': 4.0, 'pps_round': 12.8, 'converts_at': 'cap',
#  'safe_shares': 500000.0, 'round_shares': 625000.0, 'fds': 3125000.0}
```

Expected handbook output: founders 32% each, SAFE investor 16% (their 20% diluted by the
Series A's 20%), Series A investor 20%, FDS 3,125,000. Option pools and pool increases
dilute further; the full mechanics and the pool tables are in
[references/cap-table-and-safes.md](references/cap-table-and-safes.md).

## What to produce per ask

- **Always:** answer, then end with "Source:" and the chapter link or links you used,
  naming 1984 Ventures and the author when the table names one.
- **Cap table or dilution:** compute with the procedure above, show a before and after
  table (holder, shares, percent), state the dilution in points, and explain that pool
  grants move shares out of the pool rather than issuing new ones.
- **SAFE:** state both PPS values and which binds, run the recursive solve, and flag
  that a pool increase in the priced round adds recursion the snippet does not cover.
- **SAFE vs priced, side letters, pre vs post:** use the comparison and the terms list
  in seed-round-terms.md; name terms to avoid explicitly.
- **Series A dilution or negotiation:** reproduce the three-step Series A table, then
  pick the relevant levers from the ten in series-a-and-later.md.
- **Deck:** review against the principles (30-second read, one message per slide in the
  header, 15 slides, 20 max) and the 16-slide structure, slide by slide, including the
  growth-forecast and round-size benchmarks.
- **Co-founder departure:** walk the five steps, model the cap table effect for SAFE vs
  priced seed, and flag the QSBS redemption trap before recommending a buy-back.
- **Selling the company:** walk the seven steps in order, then legal prep, structure
  and terms from m-and-a-legal-and-qsbs.md. Quote the 1 to 2% of market cap rule when
  sizing what an acquirer can pay.
- **Seed engineering or open source:** the five practice areas or the 30-day plan; the
  PostHog content order ("alternatives to X", then "setup for X" under 1,000 words,
  then honest comparison tables); telemetry as privacy-first, easy opt-out.

## Boundaries

- The handbook's disclaimer applies: general education, not legal or tax advice. Say so
  whenever the answer touches a real transaction, a separation, or taxes, and point to
  counsel. QSBS figures are the chapter's as of its writing; tell the founder to confirm
  current law.
- Every number must come from the reference files. If the handbook gives no figure,
  say so.
- Do not extend the playbooks: no invented slides, M&A steps, clauses or practices.
  For exact clause language send the founder to the chapter and YC's documents.
- Do not quote long passages. Summarize and link; the chapters are the canonical text.