Cap tables are deceptively simple at the start. Two founders, a 50/50 split, ten million shares. Then friends and family put in $25K. Then an advisor takes half a point. Then a SAFE closes. Then another. Then the seed round prices.

By the time a founder sits down with a Series A partner and pulls up the cap table, they often discover that the company they thought they owned 80% of, they actually own 51% of. Sometimes less.

None of that compounding was inevitable. It happened because of decisions made one at a time, without modeling the next two rounds out.

The five decisions that compound.

1. SAFE caps.

A $500K SAFE at a $5M cap is not a $500K decision. It is a "what percent of the company will this convert into" decision. At a $5M cap, $500K converts to roughly 10%. Founders often anchor on "we raised $500K" without modeling that the conversion at the next priced round will produce 10% dilution at minimum, more if the round prices below the cap.

2. The order of SAFEs.

SAFEs convert based on the lower of cap or discount versus the priced round. If a founder runs two SAFEs at different caps ($4M and $6M), the lower cap converts at a better price for the investor and worse for the founder. Running multiple SAFEs at different caps inside a single financing window almost always disadvantages the founder.

3. Option pool sizing and timing.

Investors push to expand the option pool before the round so the dilution comes from the founders, not from the new money. A 10% pre-money option pool is the standard. A 15% one is not unusual. Modeling the pool expansion into the round economics before term sheets is the difference between losing 2% and losing 5%.

4. Advisor and broker equity.

Advisors at 0.25% to 0.50% are standard. A "fundraising advisor" offering 5% is not an advisor, they are a broker, and most institutional investors will not fund a company that has a broker on the cap table. Decisions about who gets equity have downstream gating effects on which investors will take the meeting.

5. Friends and family round structure.

Friends and family who write checks on common stock at a $10M valuation create a price floor problem. If the company later prices a seed at $8M, F&F holders are mathematically underwater. Use a SAFE or convertible note instead. Always.

The Series A math founders should run before the seed.

Before closing a seed round, run the Series A math out loud. Pick a plausible Series A: $10M raise at $40M pre. Now add the option pool expansion the Series A investor will require. Now layer in the seed pro rata rights. Now check founder ownership at the bottom.

If the founders are below 50% combined ownership after a hypothetical Series A, the seed round is too expensive. Negotiate harder, raise less, or restructure the option pool. Founders below 50% post-Series A have lower control, weaker recruiting leverage, and a harder Series B.

If founders are below 50% post-Series A, the seed was too expensive. Run the math before the term sheet, not after.

What investors are running on you.

Before the partner meeting, the analyst has already modeled your cap table at the next two rounds. They know what your dilution looks like, whether the founder team will still have control after Series B, and whether the math works for a fund that needs a 3x outcome at exit.

If the math does not work for them, the meeting does not happen. This is rarely communicated as "your cap table is bad." It comes back as "the fit is not quite right." The fit was the cap table.

Tools versus operators.

There are good cap table tools. Carta, Pulley, AngelList stack. They model conversions, they manage securities, they handle the legal artifacts. What they do not do is tell you whether the next round will leave you with enough ownership to run the company.

That is a CFO question, not a tools question. The tool runs the math you tell it to run. The CFO knows which math to run.

Three things to do this week.

  1. Pull up your cap table. Model conversion of every SAFE at three different priced round outcomes ($4M, $6M, $10M pre).
  2. Layer in a 10% option pool expansion at the seed.
  3. Check founder ownership at the bottom of the cap table. If it is below 65% post-seed, you have a structural problem to fix before the round.

This exercise takes two hours. It is the highest-leverage two hours most pre-seed founders never spend.