Modeling a fundraising round on your cap table lets you project how new investment changes ownership, share prices, and dilution before you sign a term sheet. This step-by-step guide covers priced rounds, SAFE conversions, and scenario modeling.
Modeling a fundraising round on your cap table is the process of projecting how new investment will change ownership percentages, share prices, and dilution across all existing stakeholders before you finalize terms. Getting this right before signing a term sheet prevents surprises at closing and gives founders leverage during negotiations.
Every fundraising round — whether pre-seed, seed, Series A, or later — restructures your cap table. New shares are issued, existing holders get diluted, and the post-money valuation sets the price per share going forward. This guide walks through exactly how to model each scenario step by step.
Why You Need to Model Before You Raise
Most founders wait until after they sign a term sheet to update their cap table. That is too late. By then, the economics are locked in and you have lost your window to negotiate.
Modeling a round in advance lets you answer critical questions:
- •How much ownership will founders retain after the round?
- •What is the effective price per share for new investors?
- •How does the option pool expansion affect dilution?
- •What happens to SAFE and convertible note holders when they convert?
Investors expect founders to know these numbers cold. Walking into a fundraising meeting without a modeled cap table signals inexperience and erodes trust.
The Core Components of a Fundraising Round Model
Every fundraising round model starts with four inputs:
| Component | Description | Example |
|---|---|---|
| Pre-money valuation | Company value before new investment | $8M |
| Investment amount | Total new capital raised | $2M |
| Post-money valuation | Pre-money + investment | $10M |
| Price per share | Post-money / fully diluted shares | $1.00 per share |
The post-money valuation determines the investor's ownership percentage. In this example, $2M into a $10M post-money valuation gives the new investor 20% ownership.
Fully Diluted Share Count
The fully diluted share count includes all outstanding shares, all granted options (vested and unvested), all shares reserved in the option pool, and all shares that would be created if SAFEs and convertible notes convert. This is the denominator in every ownership calculation.
Step-by-Step: Modeling a Priced Equity Round
Step 1: Calculate Your Pre-Round Cap Table
Start with every stakeholder and their current holdings:
| Stakeholder | Shares | Ownership |
|---|---|---|
| Founder A | 4,000,000 | 40% |
| Founder B | 3,000,000 | 30% |
| Angel Investors | 1,000,000 | 10% |
| Employee Option Pool | 2,000,000 | 20% |
| Total | 10,000,000 | 100% |
Step 2: Determine the Option Pool Increase
Most Series A investors require the option pool to be 10-20% of the post-money cap table. This pool expansion happens before the new investment prices in, meaning existing shareholders bear the dilution — not the new investor.
If your current pool is 10% and the investor wants 15% post-money, you need to issue additional shares to reach 15% of the post-money total.
New pool shares needed = (Target pool % × Post-money shares) − Existing pool shares
Step 3: Calculate New Shares Issued
With a $2M investment at $10M post-money:
- •Post-money fully diluted shares: 12,500,000
- •New investor shares: 12,500,000 × 20% = 2,500,000
- •Price per share: $2,000,000 / 2,500,000 = $0.80
Step 4: Build the Post-Round Cap Table
| Stakeholder | Shares | Ownership |
|---|---|---|
| Founder A | 4,000,000 | 32.0% |
| Founder B | 3,000,000 | 24.0% |
| Angel Investors | 1,000,000 | 8.0% |
| Employee Option Pool | 1,875,000 | 15.0% |
| Series A Investor | 2,500,000 | 20.0% |
| New Pool Shares | 125,000 | 1.0% |
| Total | 12,500,000 | 100% |
Notice that every existing stakeholder's percentage decreased. That is dilution in action.
Modeling SAFE and Convertible Note Conversions
SAFEs and convertible notes add complexity because they convert into equity at the fundraising round — often at a discount or with a valuation cap that gives early investors a lower effective price per share.
Valuation Cap Conversion
A SAFE with a $5M cap and $100K invested converts at the cap price regardless of the round's actual valuation:
- •Cap price per share = $5,000,000 / 10,000,000 pre-money shares = $0.50
- •Shares issued = $100,000 / $0.50 = 200,000 shares
Discount Conversion
A SAFE with a 20% discount converts at 80% of the round's price per share:
- •Discounted price = $0.80 × 0.80 = $0.64
- •Shares issued = $100,000 / $0.64 = 156,250 shares
Which Applies?
When a SAFE has both a cap and a discount, the investor gets whichever produces more shares. Always model both and use the more favorable conversion for the investor.
Modeling Multiple Scenarios
Smart founders model at least three scenarios before entering negotiations:
- Base case: The terms you expect to get
- Upside case: Higher valuation, less dilution
- Downside case: Lower valuation, more dilution, larger option pool requirement
For each scenario, track:
- •Founder ownership percentage post-round
- •Total dilution from the round
- •Effective price per share
- •Option pool as percentage of post-money
This gives you a negotiation range and helps you identify which terms matter most to your ownership outcome.
Common Modeling Mistakes
Forgetting the Option Pool Shuffle
The option pool increase is the single most misunderstood mechanic in fundraising. When an investor says they want a 15% option pool on a $10M post-money valuation, they mean the pool comes out of the pre-money valuation — diluting founders, not the investor.
Ignoring Convertible Instrument Conversions
SAFEs and convertible notes from earlier rounds convert into equity at your priced round. If you do not include them in your model, your post-round ownership numbers will be wrong. Some founders discover at closing that early SAFEs consumed 15-20% of the cap table they thought was available.
Using Outstanding Shares Instead of Fully Diluted
Never model a round using only outstanding shares. Investors price rounds on a fully diluted basis that includes all options, warrants, SAFEs, and convertible notes. Using outstanding shares will overstate your ownership and understate dilution.
Not Modeling the Pro Rata Right
Existing investors with pro rata rights can participate in new rounds to maintain their ownership percentage. If your angel investors have pro rata and exercise it, they will buy additional shares at the round price, changing the allocation.
How OpenCap Stack Helps
OpenCap Stack's fundraising round modeler lets you build unlimited what-if scenarios without touching your live cap table. Input your pre-money valuation, investment amount, and option pool target, and the platform instantly calculates post-round ownership for every stakeholder.
The dilution calculator shows exactly how each term affects founder ownership. SAFE and convertible note conversions are handled automatically — enter the cap, discount, and investment amount and see precisely how many shares each instrument produces.
When you are ready to close the round, convert your model into the actual cap table update with one click. Share the post-round cap table with investors through a secure data room that tracks who viewed what and when.
FAQ
How do I calculate dilution from a fundraising round?
Dilution equals the difference between your ownership percentage before and after the round. If you owned 40% before and 32% after, your dilution is 8 percentage points, or 20% relative dilution. Calculate it by dividing your shares by the new fully diluted share count after the round.
Should the option pool be expanded before or after the round?
Investors almost always require the option pool expansion to happen before the round closes, using the pre-money valuation. This means existing shareholders absorb the dilution from the pool increase, not the new investor. This is called the option pool shuffle.
How do SAFEs affect my fundraising round model?
SAFEs convert into equity at your priced round, typically at either a valuation cap price or a discount to the round price, whichever gives the SAFE holder more shares. You must include all outstanding SAFEs in your fully diluted share count when modeling the round.
What is the difference between pre-money and post-money valuation?
Pre-money valuation is the agreed value of the company before new investment. Post-money valuation equals pre-money plus the investment amount. A $2M investment at an $8M pre-money valuation results in a $10M post-money valuation and 20% ownership for the investor.
How many fundraising scenarios should I model?
Model at least three scenarios: a base case with expected terms, an upside case with higher valuation and less dilution, and a downside case with lower valuation and more dilution. This gives you a clear negotiation range and helps you understand which terms have the biggest impact on founder ownership.
When should I update my cap table after closing a round?
Update your cap table immediately after closing. Record the new share issuance, SAFE and note conversions, option pool changes, and updated ownership percentages. Delaying this creates discrepancies that compound with future transactions and complicate your next raise.
