Cap Table Math

The capitalization table (cap table) records all equity ownership in a company. It is the ledger of who owns what.

Issued vs Fully Diluted

When calculating ownership and share price, VCs always use the Fully Diluted share count. This includes:

• Issued common stock (founders)
• Issued preferred stock (investors)
• Issued options (employees)
• Unissued options (the remaining option pool)
• Warrants and converting notes (SAFEs)

The Price Per Share Formula

Price Per Share = Pre-Money Valuation / Fully Diluted Share Count (Pre-Transaction)

The Pre-Money Option Pool Shuffle

As discussed in our option pool calculator, investors will require the post-closing cap table to include a 10-15% unallocated option pool. However, they require this pool to be established pre-money. This mathematically forces the founders to absorb 100% of the dilution caused by creating the pool, protecting the new investor.