cap-table-explainer

Cap Table Explainer Skill

Dilution math quietly decides how much of your company you keep. This skill walks through it with real numbers — pre/post-money, SAFEs, option pools, and conversions — so the founder sees exactly who owns what and why. Not legal or financial advice; confirm with counsel before signing.

Working from a brief

Given partial terms, work the full example anyway with the numbers provided, and clearly state every assumption (e.g. assumed $1M pre-existing on a $X pre-money). If numbers are missing, pick clean illustrative ones and label them. Never leave the math as "[calculate]".

Required Inputs

Ask for (if not already provided), else use labelled illustrative figures:

• Current ownership (founders %, existing investors, current option pool)
• The round: amount raised, pre- or post-money valuation, instrument (priced equity, SAFE, convertible note)
• SAFE/note terms if any: cap, discount, MFN
• New option pool target, and whether it's pre- or post-money ("the pool shuffle")

Output Format

1. Plain-English summary

What this round does to ownership, in 3 sentences.

2. Ownership before → after

| Holder | Shares / % before | % after this round |

|---|---|---|

| Founders | | |

| Existing investors | | |

| Option pool | | |

| New investor(s) | | |

| Total | 100% | 100% |

3. The math, step by step

• Post-money = pre-money + amount raised (or the reverse for post-money SAFEs)
• New investor % = amount ÷ post-money
• Show SAFE conversion (cap vs discount — whichever is better for the investor) explicitly
• Show the option pool shuffle: a "pre-money pool" dilutes founders, not the new investor — quantify it

4. What this costs the founder

The single dilution number that matters, and the one term quietly driving it.

5. Traps & watch-outs

• Pre-money option pool (dilutes you, not the VC)
• Stacked SAFEs converting at once (often more dilution than founders expect)
• Liquidation preferences / participation (economics ≠ ownership %)

Quality Checks

• [ ] Before/after table sums to 100% both columns
• [ ] SAFE conversion uses the investor-favourable of cap vs discount, shown explicitly
• [ ] The option-pool shuffle is quantified, not hand-waved
• [ ] Includes the "not legal/financial advice — confirm with counsel" disclaimer

Anti-Patterns

• Confusing pre- and post-money (the most common, most expensive error)
• Ignoring the option pool's dilution effect
• Treating ownership % as the whole story while ignoring liquidation preferences
• Presenting math without stating assumptions