Sourcing, Underwriting, Structuring and Building a Career in Growth Equity
Julian R. Sterling
These are the companion files of The Growth Equity Investor by Julian R. Sterling.The book on Amazon →
One Excel workbook that writes down the numbers Chapter 12 leaves in words. Around it, a blank version for your own fund, five working documents to print, forty questions that mark themselves, and three cases the book does not work. All free. Nothing is gated behind a sign-up, and no email address is asked for.
Six workbooks, the printable documents and the read-me. Each group below can also be
downloaded on its own. Last revised 22 September 2026.
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Chapter 12 states seven quantities in words — fifteen to twenty positions, a
double-digit stake, an equal amount reserved alongside every initial dollar, two follow-on
rounds — and not one figure in digits. The file runs those quantities, and four things
come out that the chapter does not say.
A pro rata cheque costs less than the original one, not more. The chapter
says exercising pro rata “costs real capital — often more than the original check,
because the company is now more valuable”. On its own parameters round C costs
half the initial cheque and round D three quarters. The
explanation is the wrong half of the identity: a pro rata is your ownership times the round
size, and size is dilution times valuation. Companies that get more valuable sell
less. The sheet tabulates the break-even — at a twenty per cent round the company must
be worth five times its entry valuation before the chapter’s sentence
becomes true.
A one-to-one reserve is too tight and too loose at once. Defending one winner
through both rounds costs 1.25× its cheque, against one times held back
— so it does not stretch to the “lean in” promised in the same sentence.
Across fifteen positions, where five never raise again, pure defence uses
48 per cent of the pool and leaves 155 idle. Both are true, and they point
opposite ways.
Defending always costs you multiple. Same company, same exit: 7.65×
undefended against 5.00× defended, while the internal rate of return
barely moves — 40.4 against 40.8 per cent. That is mechanical, not incidental. Follow-on
dollars are bought above the entry price by construction, so there is no exit value at which
defending improves the multiple. Reserves buy profit dollars and scale; they do not buy
multiple.
And there is a band where defending loses money outright. Below an exit of
about 520 the follow-on dollars come back worth less than they cost —
and at that exit the company is worth nearly four times its entry valuation and the original
cheque is still returning 2.66×. The ordinary good-but-not-great
outcome, in which defending converts a solid winner into a worse one.
The last sheet tests the sentence at the centre of the chapter, that reserves shape returns
“as much as picking winners does”. Like for like, a fund with no reserve owns
36 per cent more of the identical company set — and the one-to-one
fund’s idle reserve closes that gap at 1.02× what it has left.
Break-even, almost exactly. Which makes it not a parallel claim but the same claim: a reserve
is worth the selection quality of the follow-on decision and nothing else. Twenty-four checks.
Change the round C dilution from twenty per cent to thirty and watch the break-even step-up
fall from five times to three and a third — the only condition under which the
chapter’s sentence about pro rata is true is a company selling a lot of itself at a high
price, which is a distressed round, not a good one. Then drop the exit to four hundred and read
the last two columns of the band sheet: the follow-on dollars return seventy-seven cents while
the original cheque returns two times, and nothing about the company has gone wrong.
What the arithmetic does not settle
It cannot tell you which names will raise again, which is the input the whole reserve question
turns on and the one nobody knows at fund formation. It cannot price access — a fund may
defend its ownership to keep a seat rather than to make money on the marginal dollar, and that
can be right for reasons no multiple captures. And it deliberately gives neither fund any
selection skill, because the moment you assume an edge on follow-ons you have assumed the answer.
The point of the like-for-like is to show what a reserve is worth before the edge, so
that the edge has to be argued rather than presumed.
The same model, for your own fund
The workbook with every input emptied. Enter your own fund and company; the checks sheet counts what is still missing and runs eight tests that hold for any inputs.
Chapter 12 and Appendix C
A blank reserves model
Fund size, positions, reserve ratio, entry ownership, two follow-on rounds, the exit. The file gives the initial cheque, the pro rata cheques, the defended and undefended multiples, the exit below which the follow-on dollars lose money, and what the reserve is worth against picking winners. One line tells you whether the pro rata is below the initial cheque on your inputs: the chapter says it is often above.
The book’s inputs are listed in a text file inside the archive. Type them back in and the file returns 7.65 against 5.00, and a break-even exit of 520.8.
Five pages to print and take into a meeting. A4, with margins wide enough for US Letter.
Appendix B · Chapters 4, 7, 9, 10, 11 and 15
Five working documents
The checklist of Appendix B, question by question. The six-test readiness screen of Chapter 4 with every Chapter 7 metric, reported against rebuilt. A return model that gives the walk-away price in two divisions, with a waterfall at three exits. A diligence plan in five workstreams, each with a hypothesis and a dealbreaker named in advance. And the first ninety days on a growth team.
A workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All parts of the book
Forty questions on the book
Eight on the foundations and the return identity, seven on unit economics, seven on valuation, five on structure, six on reserves and seven on the three cases below. Numbers are marked to a tolerance, multiple choice to the letter, and the score sheet counts your errors part by part: that is your revision list.
Nothing is hidden. The marking sheet holds every answer, every tolerance, and the reason for each answer.
New material, not a restatement. Three situations the chapters name in passing and never take to a number. Each case is one workbook: the note is the first sheet, the model is the rest, and a checks sheet closes it. Type your own figures in and every finding recomputes.
Chapters 10 and 14 · Case one
The sale below the last round
You own 21.25 per cent after a series C at 400 million, marked at 2.83 times your money. The company sells for 150 and you get your money back, 1.00x. A 1x non-participating round converts exactly at its own post-money, so every sale below the last round’s price is decided by the stack, not by ownership. A participating series C would take another 7 to 13 million from you.
Chapters 7 and 11 · Case two
The 120 per cent that belongs to three customers
Chapter 11’s company, in numbers. Net retention is 120 per cent blended and 101 per cent for everyone but three accounts, which produce 96 per cent of the base’s net growth. If they simply stop expanding, next year’s growth falls from 50 per cent to 21. The chapter 7 company is recomputed too: its Rule of 40 score is 15, not the 30 the chapter prints, and its conclusion holds more strongly.
Chapter 9 · Case three
The walk-away price, solved
The chapter asks for the walk-away price and never solves it. With a 2.5x base bar and money back in the bear case, it is 346.8 million, and both bars bind at once. The chapter is right to decline the 360 ask, by 13 million, not 60. Raise the base bar to 3.0x and its own 300 fails.
twenty-four controls, each stating its own verdict — three of them structural
Every figure is illustrative, as everything in the book is. The fund, the company, the rounds
and the exit are invented. The arithmetic is not — and one of the checks exists precisely
because it disagrees with the chapter.
Opening the file
The workbook opens in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers. It uses no
macros and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet asks to
update links on opening, decline — there are none.
What changed, and when
22 Sep 2026
A blank version of the reserves model, five working documents on five pages, forty questions that mark themselves and three new cases. The book’s workbook can now also be downloaded on its own; its content has not changed.
How do you calculate net revenue retention (NRR)?Starting ARR plus expansion, less contraction and churn, over starting ARR: 57.5 over 50.0 is 115.0 per cent, and 94.3 without the top three accounts.
How do you calculate CAC payback period?Prior-quarter S&M over new ARR times gross margin, times 12: 6.0 over 4.8 at 75 per cent is 20.0 months. Other definitions give 15.0 to 26.7.
How do you calculate the burn multiple?Net burn over net new ARR: 24.0 of burn for 16.0 of net new ARR is a 1.50x burn multiple. The same year reads 1.09x to 1.75x on other definitions.
How do you convert monthly churn to annual churn?Compound it, do not multiply: 2.0 per cent a month is 1 - 0.98^12 = 21.5 per cent a year, not 24.0. Going back, 10 per cent a year is 0.874 per cent a month.
How do you calculate the SaaS magic number?Net new ARR over prior-quarter sales and marketing: 3.0 over 3.9 is a magic number of 0.77. The same quarter reads 0.58 to 1.03 on other definitions.
How do you calculate the SaaS quick ratio?ARR gained over ARR lost: 5.5 added against 2.0 lost is a quick ratio of 2.75. The same 3.5 of net new ARR from 8.5 in and 5.0 out scores only 1.70.
How does an IPO ratchet work in a growth equity deal?It issues the investor extra shares so its stake is worth the guaranteed multiple at the IPO: a 1.5x ratchet at a 1,200.0 IPO value needs 1.4286m shares, not 1.25m.
How many sales reps does a SaaS growth plan need?Divide new-logo ARR by quota times attainment, then allow for ramp and attrition: 22.0 of new-logo ARR needs 23 reps hired in January, not the 4 quota math suggests.
Closing the DealTwo defensible bridges 20.70 million apart, a peg worth 7.00 million, and the six choices that remove 6.60 of a 12.00 earn-out.
CMBS and CRE CLOsWhere the loss actually lands, from appraisal reduction to realised severity, and what the B-piece is really being paid for.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Credit AgreementWhere the default actually comes from, the cure that costs 5.5 times the other, and the capacity nobody adds up.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Private Equity Real EstateBoth worked waterfalls to the dollar, the two capital stacks, and the arithmetic of the promote made changeable.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
Raising a Real Estate FundThe chapter 17 funnel run on a calendar — when the first close actually lands, and why more travel does not help.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Real Estate Financial ModelingProperty, development and fund models built line by line, and the modelling test worked end to end.
Real Estate Fund ManagementThe waterfall of 6.11, the build-to-core of 8.7 and the proceeds gap, reproduced as live formulas rather than asserted.
REIT Analysis and ValuationFFO of 532.0, AFFO of 381.0, net asset value and dividend safety — every figure a formula you can change.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Venture Capital AssociateWhat defending a position costs, and how many companies a reserve pool actually defends.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Credit AnalysisFour defensible EBITDAs on one borrower give leverage from 3.19x to 6.47x — and the add-back argument is fifty times the covenant headroom.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
Treasury ManagementFive cash balances for one company, all correct and 145,600,000 apart — and the revolver that is two-thirds of the liquidity leaves at a revenue fall of 8.4127 per cent.
Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
Construction Cost ControlA contract sum of 26,301,102 became a final account of 29,153,363 on the building that was drawn — and 85.8 per cent of what was lost was knowable on the day it was signed.
Pricing StrategyA list price of 148.00, a pocket price of 112.51, and the nine deductions in between — with what one point of price is actually worth.
Trade FinanceSix routes to payment on one 4,200,000 export order cost between 178,040 and 223,268, a spread worth 14.8 per cent of the margin, and a day of buyer credit costs 1,031.76.
Cost AccountingOne factory costed twice on the same 13,440,000 of overhead, and 4,053,091 moves between four product families.
Contract ManagementA bid 5.50 a unit cheaper, signed on paper worth 9.81 a unit more — and 94.68 per cent of it was knowable on the day of signature.
Capital MarketsFour defensible readings of one bond, the cost of an issue under each convention, and the placement discount computed at a constant discount.
Financial RegulationThree ratios pass and the fourth is in breach by 1,956.0 million: the output floor, the liquidity buffer after encumbrance, and the loan split.
Bank ManagementFour defensible readings of one balance sheet, the deposit beta measured two ways, and the liquidity that lasts 3.9 days.
The Real Estate WorkoutFour ways out of one broken loan, discounted to today, and the 58.7 cents at which a payoff beats enforcement.
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