Walking a priced Series A

Here is the full arithmetic of an $8M Series A at $32M pre, with investors requiring a 10% post-money option pool carved pre-money. Round numbers so you can check by hand. A live deal also converts SAFEs first — see SAFE math and Series A on the cap table.

Walking through it

Setup: founders + seed holders own 8,000,000 common shares. No unused pool left. Lead invests $8,000,000 at $32,000,000 pre-money.

Step 1 — Ownership targets

post-money = 32M + 8M = 40M
Series A % = 8 / 40 = 20%
pool %     = 10% of post-money
existing % = 100% − 20% − 10% = 70%

Step 2 — Share counts from existing holders

Existing 8,000,000 shares must equal 70% of the post-money fully diluted company:

post-money FD shares = 8,000,000 / 0.70 ≈ 11,428,571
Series A shares      = 0.20 × 11,428,571 ≈ 2,285,714
new pool shares      = 0.10 × 11,428,571 ≈ 1,142,857

Step 3 — Price per share

pre-money FD shares = existing + new pool = 8,000,000 + 1,142,857 = 9,142,857
price per share     = 32,000,000 / 9,142,857 ≈ $3.50

check: 2,285,714 × $3.50 ≈ $8,000,000  ✓

Step 4 — Cap table after close

Same $8M raise, but a 15% post-money pool at the same $32M headline pre. Then existing hold only 65% post (100 − 20 − 15). Post-money FD shares = 8,000,000 / 0.65 ≈ 12,307,692. Price = 32M / (8M + 0.15×12.307M) ≈ 32M / 9.846M ≈ $3.25. Founders sold the same 20% to Series A but gave up another ~5 points to the pool — equivalent to roughly a $2M haircut on effective pre-money (40M × 5%).

Without the shuffle (pool created after money in, shared dilution): Series A would own 20% × (1 − 10%) = 18% after the pool grant, or you would need to issue them more shares to restore 20%. That is why the shuffle exists: it keeps the investor's percentage clean.

Common mistakes

• Building the table from 80% remaining and then bolting on a 10% pool. Existing holders then do not add to 100%.
• Skipping the $3.50 check. If shares × price ≠ investment, the pool or the SAFE conversion is wrong.
• Multiple closings without a full pro forma. The friend who "might join for $500k in 45 days" changes the table if they do.

Check yourself

Existing 8,000,000 shares, 20% new money, 10% post-money pool. What % do existing holders keep?

70% — 100 − 20 − 10.

Why is price ~$3.50 rather than $32M / 8M = $4.00?

The new pool is in the pre-money fully diluted denominator: 32M / 9.14M ≈ $3.50.

Key takeaways

• Back into post-money FD shares from existing shares / existing %.
• Price = pre-money / (existing + new pool).
• A 15% pool vs 10% at the same headline is a real haircut.
• Reconcile ownership targets and share math; they must agree.

Further learning

Next: closing a priced round.