Series A on the cap table

Northwind (from walking a cap table) now raises Series A. After two SAFEs, founders sit at 38.475% each, the pool at 8.55%, pre-seed at 4.5%, seed at 10%.

Terms, simplified:

• Series A investment: $8,000,000
• Pre-money: $32,000,000 → post-money $40,000,000
• New-money ownership: $8M ÷ $40M = 20%
• Investors require the option pool to be 15% of post-money FD after the round. The top-up is carved from the pre-money — the option pool shuffle.

Exact SAFE share counts in a live deal follow the documents and whether the top-up sits inside the pre-money. Recompute from the term sheet. The pattern: each financing multiplies prior ownership by (1 − new money %), and pool expansions multiply it again.

Walking through Series A

Pick post-money fully diluted shares = 12,500,000.

Series A shares     = 20% × 12,500,000 = 2,500,000
Option pool (total) = 15% × 12,500,000 = 1,875,000
  (400,000 already granted; available = 1,475,000)

SAFE holders were promised 4.5% and 10% after SAFE conversion and before Series A money. After Series A sells 20%:

Pre-seed post-A: 4.5% × 0.80 = 3.6%  → 450,000 shares
Seed post-A:      10% × 0.80 = 8.0%  → 1,000,000 shares
Founders' common: 8,125,000 − 450,000 − 1,000,000 = 6,675,000
Each founder:     3,337,500 → 26.7%

Price per Series A share: $8,000,000 / 2,500,000 = $3.20. Check: $3.20 × 10,000,000 = $32,000,000 pre-money.

Founders started at 45% each. After pre-seed, seed and Series A they are at 26.7% each — still a majority together (53.4%). Dilution bought $10M of capital ($2M SAFE + $8M A) and a real hiring pool.

Series B and pro-rata

Two years later: $25,000,000 on a $100,000,000 pre-money → $125,000,000 post, new money 20%. The pool is topped up to 10% of post-money FD.

If the refresh plus B together leave prior holders with 78% of post-money FD (20% B plus ~2% extra pool from the pre-money):

Founder A after B ≈ 26.7% × 0.78 ≈ 20.8%
Series A after B  ≈ 20.0% × 0.78 ≈ 15.6%

A pure × 0.80 after A and × 0.80 after B on 26.7% gives 21.36%. The gap is the pool refresh — model it explicitly.

Pro-rata lets Series A buy enough of B to hold 20%. Maintenance check ≈ 20% × $25M = $5M. Then:

Old stake diluted: 20% × 0.80 = 16%
New B shares:      $5M / $125M = 4%
Total Series A:    20%

Founders usually do not have pro-rata on preferred rounds unless they invest cash. Employees almost never do. See pro-rata rights.

Combined founders: 90% → ~77% after SAFEs → ~53% after A → ~42% after B. Smaller percentages of a company that, if the valuations are real, went from ~$0 to a $125M post-money story.

Common mistakes

• Celebrating 38% founder ownership after SAFEs without modeling the A pool shuffle.
• Forgetting Series A can buy $5M of B and hold 20% while founders cannot.
• Using the 0.78 vs 0.80 gap as rounding. It is the refresh. Put it in the spreadsheet.

Check yourself

Series A owns 20% with full pro-rata. B sells 20% of a $125M post for $25M. How much must Series A invest to hold 20%?

About $5M — 20% of the $25M new money — plus the share math on any pool refresh.

Founders are at 26.7% after A. After a 20% B and no founder pro-rata, what is the pure-dilution estimate?

26.7% × 0.80 ≈ 21.4%, before extra pool-refresh dilution.

Key takeaways

• Convert SAFEs, set the post-money FD, then assign the new preferred and the required pool.
• Each round multiplies prior % by (1 − d); pool top-ups add another cut from the pre-money.
• Pro-rata is how early funds hold ownership. Founders rarely get the same deal without cash.

Further learning

Kirsty Nathoo (YC) on SAFE conversion and priced-round dilution: