- What is a cap table?
- A capitalization table — cap table — is the list of every shareholder in a company and how many shares each one owns. Founders, employees with options, investors, advisors, anyone with equity. As the company raises money or issues options, the table grows. The percentages on the cap table are what get diluted when new shares are issued. Lawyers maintain the legal version; founders use simplified models like this one to plan ahead.
- What does pre-money vs. post-money valuation mean?
- Pre-money is what the company is worth before the round closes. Post-money is pre-money plus the amount raised. A $4M pre-money round of $1M closes at $5M post-money — and the new investors own $1M / $5M = 20% of the company. The pre-money is the negotiation point. The post-money is the math that follows from it.
- How is dilution actually calculated?
- Price per share = pre-money valuation ÷ shares outstanding before the round. New shares issued = amount raised ÷ price per share. Total shares after the round = old shares + new shares. Every prior holder keeps their absolute share count, but their percentage is now their_shares ÷ new_total — which is smaller because the denominator grew. That's dilution: same shares, bigger pie.
- Why does the option pool dilute founders before the round?
- Because of how the pool is carved. In this model, we create the pool from the founders' day-one cap. If you start with 10M founder shares and want a 10% pool, the math is: pool / (founder + pool) = 10%, so pool = 1,111,111 shares — and founders now own 90% of the now-11.1M-share company. Real-world Series A term sheets often require a top-up pre-money — the pool gets refilled before the round closes, diluting existing holders again. That's a v2 modeling feature; this tool holds the pool fixed.
- What's a typical option pool size?
- 10-20% at the early stage. Companies tend to refill the pool at each round so new option grants don't dilute existing employees. By Series B or C, cumulative option pool is often 15-25% of the cap table. The pool is the headroom for future hires — burning through it without refilling means you can't grant competitive equity to a new VP, which is a real problem.
- What ownership should founders keep through Series A?
- Common pattern: 90-95% at incorporation, 70-80% after seed, 50-65% after Series A, 35-50% after Series B. The exact numbers depend on how capital-efficient the company is — founders who raise small at high valuations dilute less. Below ~50% combined founder ownership at Series A is unusual outside of capital-intensive sectors (biotech, hardware, infrastructure).
- Does this model handle SAFEs or convertible notes?
- No. SAFEs and convertible notes don't have a share count until they convert — typically at the next priced round, with a discount and/or valuation cap that determines the conversion price. To model them, convert each SAFE or note into the equivalent priced-round shares at the cap or discount, then add those as a separate round in this calculator. A standalone SAFE conversion calculator is a separate tool.
- What's the difference between a priced round and a SAFE?
- A priced round sets a per-share price and issues actual stock today. A SAFE (or convertible note) defers that decision: the investor gives you money now, and the conversion to stock happens at the next priced round under terms negotiated up front (a cap on the valuation, a discount on the share price, or both). Priced rounds are simpler and more expensive in legal fees; SAFEs are faster and cheaper but stack up ambiguity that gets settled all at once at conversion.
- Why does the founders' percentage drop more than the raise size suggests?
- It doesn't, really — it just feels that way because the pool was created first. With a 10% pool, founders start at 90%, not 100%. A $1M / $4M pre seed then takes founders from 90% to 72% — an 18-percentage-point drop, but proportionally founders gave up 20% of what they held (0.9 × 0.8 = 0.72). The 20% matches the 20% the seed investors own. The pool just shifts the starting line.
- What does the calculator NOT model?
- Liquidation preferences (most preferred stock gets paid out first in an exit), anti-dilution provisions (preferred stockholders' conversion ratio adjusts on a down round), pro-rata rights (existing investors get to maintain their percentage in the next round), pool top-ups pre-money (Series A leads often require this), employee secondary sales, and the 83(b) tax election. This is a back-of-envelope ownership model. Real cap tables live in Carta or Pulley.
