A cap table (capitalisation table) shows who owns what share of a startup: founders, investors, the option pool, and holders of SAFEs and convertible loans.
Dilution in a round is calculated like this: the new investor’s stake = investment ÷ (pre-money + investment), and everyone else’s stake shrinks proportionally. For example, €1m at a €4m pre-money gives the investor 20%.
Below: what a cap table contains, how stakes are diluted from pre-seed to Series A in one worked example, how the option pool and SAFEs cut founders’ stakes more than expected, how anti-dilution protection works, and how all of this looks in a Spanish SL. The page includes a dilution calculator and a free Excel template.
What is a cap table
It is a register of the company’s owners and their stakes — now and after each round.
Investors ask for the cap table among the first documents: it shows how much motivation the founders have left, who else may claim equity and how the picture will change after their money.
What a cap table includes
| Row | What it contains |
|---|---|
| Founders | Each founder’s stake, vesting (how much is already earned) |
| Investors by round | Angels, funds: stakes, entry price, special rights |
| Option pool | Granted options and the unallocated balance for future hires |
| Convertible instruments | SAFEs, convertible loans: amount, valuation cap, discount |
| Total | Number of shares and percentages: issued and fully diluted |
Issued vs fully diluted
Issued shares are those already held by members.
The fully diluted base adds the whole option pool — granted and unallocated — and everything SAFEs and convertible loans will turn into.
Investors calculate their stake on the fully diluted base, so founders should look at it too.
How to calculate dilution
When a company issues new shares to an investor, every existing holder’s percentage falls — that is dilution. The number of shares they hold does not change; their weight does.
- New investor’s stake = investment ÷ post-money.
- An existing holder’s new stake = old stake × (1 − new investor’s stake − pool top-up).
Example: a founder holds 60%. An investor puts in €1m at a €4m pre-money and gets 20%. The founder’s stake: 60% × 0.8 = 48%.
In euros the stake has not shrunk: 60% of €4m is €2.4m, and 48% of €5m is the same €2.4m. But the company now has €1m more to grow with.
How to set the valuation itself: How to value a startup.
Worked example: from pre-seed to Series A
An illustrative example. Two founders split the company equally.
- Pre-seed. An angel invests €300,000 through a post-money SAFE with a €3m valuation cap. It is not equity yet, but a right to 10% at the next round.
- Seed. A fund invests €1.5m at a €6m pre-money and asks for a 10% post-money option pool. The SAFE converts at the cap.
- Series A. €5m at a €20m pre-money; the pool is topped up to 12%.
| Holder | Start | After seed | After Series A |
|---|---|---|---|
| Founder 1 | 50% | 31.5% | 23.8% |
| Founder 2 | 50% | 31.5% | 23.8% |
| Angel (SAFE) | — | 7% | 5.3% |
| Option pool | — | 10% | 12% |
| Seed fund | — | 20% | 15.1% |
| Series A fund | — | — | 20% |
Founders together: 100% → 63% → 47.6%.
Two rounds and a SAFE took more than half the company, and more than a third of that dilution came not from the rounds’ money but from the option pool and the SAFE conversion.
The option pool shuffle
Funds usually ask for the employee option pool to be created or expanded before the round and included in the pre-money.
Then only the existing holders pay for the pool, and the investor gets their full stake. Venture Hacks described this effect back in 2007 as the option pool shuffle.
In the example above, the seed round’s headline pre-money is €6m. But after the round the founders hold 63% of a company worth €7.5m — a stake worth €4.7m.
The difference of about €1.3m went to the pool and the SAFE. That is the founders’ effective pre-money.
What you can negotiate:
- the pool size — based on an 18–24 month hiring plan, not a “standard 15%”;
- creating the pool after the round rather than before, so everyone, including the new investor, is diluted;
- counting options already granted towards the pool.
SAFEs and convertible loans on the cap table
Before conversion, SAFEs and loans do not show up as percentages — which is exactly why ignoring them is dangerous.
In the post-money SAFE, the standard from accelerator Y Combinator, the holder’s stake is simple: amount ÷ valuation cap. €300,000 at a €3m cap is 10% of the company before the next round’s money. The round’s money then dilutes the SAFE holder too.
A convertible loan usually converts at the lower of two prices: the valuation cap or the round price less a discount. Accrued interest converts into shares as well.
Several SAFEs and loans in a row add up, and the result often surprises founders. So put them on the cap table straight away, as a conversion scenario.
How SAFEs and convertible loans are documented in a Spanish SL: How to structure startup investment in Spain.
Anti-dilution: full ratchet vs weighted average
If the next round is priced lower per share (a down round), an investor with anti-dilution protection is compensated with extra shares. There are two main versions.
- Full ratchet. The investor’s entry price is reset to the new, lower price — as if they had bought at it from the start.
- Weighted average. New price = old price × (A + B) ÷ (A + C). A — shares before the round, B — shares the new money would buy at the old price, C — shares actually issued.
An illustrative example. The seed fund invested €1.5m at €6 per share and received 250,000 shares. Before the new round the company has 1,000,000 shares. The new round raises €2m at €4 per share, issuing 500,000 shares.
| Version | New price for the fund | Fund’s shares |
|---|---|---|
| No protection | €6 | 250,000 |
| Weighted average | 6 × (1,000,000 + 333,333) ÷ (1,000,000 + 500,000) = €5.33 | 281,250 |
| Full ratchet | €4 | 375,000 |
The fund’s extra shares come out of the founders’ stake. So at an early stage, agree at most to weighted average protection.
A full ratchet makes every lower-priced round painful for founders and scares off new investors. See also Founder skin in the game.
Another term that changes the money at a sale is the liquidation preference.
With a 1x non-participating preference, the investor takes either their money back or their stake — whichever is larger. Example: the fund invested €1.5m for 20%.
The company sells for €5m: 20% is €1m, so the fund takes €1.5m and the rest share €3.5m. It sells for €30m: 20% is €6m, so the fund takes its stake.
The cap table of a Spanish SL
Participaciones, not stock
An SL’s capital is divided into participaciones.
They are not securities: you cannot issue a “batch” for future investors, and every investor entry is a capital increase.
The company keeps a register of members (libro registro de socios), and transfers of participaciones are executed as a public deed before a notary.
Capital increase and pre-emption rights
New participaciones are issued by resolution of the general meeting, executed before a notary and registered with the Commercial Registry.
The price per share is nominal value plus share premium (prima de emisión).
In a cash increase, existing members are entitled to take up new shares in proportion to their holdings (art. 304 LSC), so the waiver or exclusion of this right for the round is set out in advance in the shareholders’ agreement.
Convertible instruments
An SL cannot issue bonds convertible into participaciones (art. 401 LSC).
So a convertible loan to an SL is a private loan agreement, and conversion is a capital increase by offsetting the loan.
On the cap table, such agreements sit on a separate row with their conversion terms.
Employee options and the Startups Act
The Startups Act (Ley 28/2022, art. 10) allows an SL with empresa emergente status to buy back its own participaciones — up to 20% of capital — to grant them to directors, employees and other contributors under a remuneration plan.
The plan must be provided for in the articles and approved by the general meeting.
For employees of an empresa emergente, income from shares received, including on exercising options, is exempt from IRPF up to €50,000 a year if the conditions of art. 42.3.f of the IRPF Act are met.
Tax on the amount above the limit is deferred until the shares are sold or the company lists, but for no more than 10 years (art. 14.2.m).
Whether the pool is built from the company’s own participaciones or contractual options with a future capital increase is for your lawyer to decide.
How to split equity between founders and set up vesting before the first round: How to split equity between startup co-founders.
Dilution calculator
Enter the stakes before the round, the valuation, the investment and the pool requirement.
The button at the bottom carries the result over as the starting point, so you can model several rounds in a row.
Excel cap table template
The template has four sheets: instructions; the cap table by round — pre-seed with a SAFE, seed and Series A with an option pool; exit proceeds with a liquidation preference; and an SL log — deed dates, share numbers, register entries. Change the yellow cells; everything else recalculates.
Download the cap table template (Excel)
Frequently asked questions
What is a cap table?
A table of the company’s owners: who holds what percentage now and after each round. It includes founders, investors, the option pool and convertible instruments such as SAFEs.
How do you calculate dilution?
The new investor’s stake = investment ÷ (pre-money + investment). Existing stakes are multiplied by (1 − investor’s stake − option pool top-up). Example: 60% becomes 48% in a round that sells 20%.
What is the option pool shuffle?
When the investor requires the option pool to be created before the round and included in the pre-money, only existing holders pay for it. The founders’ effective pre-money is then lower than the headline valuation.
What is fully diluted ownership?
A stake calculated on all of the company’s shares, including the whole option pool — granted and unallocated — and the future conversion of SAFEs and loans. Investors calculate their stake this way.
How does a post-money SAFE convert?
The holder’s stake = SAFE amount ÷ valuation cap, before the next round’s money. For example, €300,000 at a €3m cap is 10%. The round’s money then dilutes the holder too.
What is the difference between full ratchet and weighted average?
Full ratchet resets the investor’s entry price to the new, lower price in full. Weighted average takes into account how many shares were issued at the low price and gives less compensation. In both cases the founders pay.
Can a Spanish SL issue SAFEs or convertible bonds?
An SL cannot issue bonds convertible into participaciones. SAFEs and convertible loans are private agreements, and conversion is a capital increase before a notary.
Do you need a notary when an investor comes into an SL?
Yes. An investor’s entry is a capital increase: a general meeting resolution, a public deed before a notary and registration with the Commercial Registry.
Key points on cap tables and dilution
- A cap table shows the company’s owners now and after each round, on a fully diluted basis.
- New investor’s stake = investment ÷ post-money; everyone else is diluted proportionally.
- An option pool in the pre-money and SAFE conversion cut the founders’ stake more than the round’s money.
- Weighted average anti-dilution is acceptable; a full ratchet at an early stage is not.
- In an SL every investor entry is a capital increase before a notary, subject to members’ pre-emption rights.
Sources
- Venture Hacks — The Option Pool Shuffle (2007).
- Y Combinator — post-money SAFE and user guide.
- Spanish Companies Act (RDL 1/2010, LSC) — arts. 304, 401.
- Startups Act (Ley 28/2022) — art. 10.
- Spanish Personal Income Tax Act (Ley 35/2006) — arts. 14.2.m, 42.3.f.
