Walking a cap table

Meet Northwind, a two-founder Delaware C-corp. Round numbers are chosen so you can check the arithmetic by hand. Real deals look messier. The structure is the same.

Step 0 — Incorporation

Authorized common: 10,000,000. Issued at formation:

Outstanding = 9,000,000. The pool is not outstanding until options are granted and exercised, but it is in the fully diluted denominator from day one if you model it that way (standard practice). Founders vest over four years with a one-year cliff — see founder equity and vesting — but ownership % counts the full grant.

Step 1 — Pre-seed SAFE

Northwind raises $500,000 on a post-money SAFE with a $10,000,000 post-money cap (no discount).

SAFE ownership = $500k ÷ $10M = 5%

That 5% is of the company after the SAFE converts, before new priced-round money (and before any pool expansion at the priced round).

Everyone else is multiplied by (1 − 0.05). Cash in the bank: $500k. Share count unchanged until conversion.

Step 2 — Seed SAFE

Six months later: $1,500,000 SAFE at a $15,000,000 post-money cap → $1.5M ÷ $15M = 10%.

Each new post-money SAFE takes its % of the whole company at its own cap, which dilutes prior SAFE holders as well as founders.

Pre-seed remaining: 5% × (1 − 0.10) = 4.5%
Seed SAFE:          10%
Everyone from Step 0: prior × 0.95 × 0.90

Cash raised on SAFEs: $2.0M. Still no priced preferred.

Step 3 — Grants from the existing pool

Before Series A, Northwind grants 400,000 options from the 1,000,000 pool (low 409A strike). Granted options move from "available" to "outstanding options." Fully diluted stays 10,000,000 until the pool is expanded — only the composition of the pool line changes. Founder and SAFE % do not move. Expanding the pool is what dilutes people. See option pools.

Common mistakes

• Adding the two SAFE percents as 15% and leaving founders at 85%. The second SAFE also dilutes the first (5% → 4.5%).
• Treating grants from a reserved pool as a new issuance. FD does not change until you enlarge the reserve.
• Forgetting no preferred shares exist yet. These are modeled claims, not stock certificates.

Check yourself

After a 5% SAFE then a 10% SAFE, what is a 45% founder's ownership?

45% × 0.95 × 0.90 = 38.475%.

The company grants 400,000 options from a 1,000,000 reserved pool. Do founder percentages change?

No. The pool was already in the fully diluted count.

Key takeaways

• Post-money SAFEs lock % = investment ÷ cap and stack; each one dilutes everyone already on the table.
• Grants from a reserved pool reshuffle the pool line; they do not grow FD.
• Next, convert these claims in a priced round.

Further learning

Continue with Series A on the cap table.