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
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
1---2name: cap-table-explainer3description: Explain a cap table, dilution, SAFEs, option pools, and round mechanics in plain English with the actual math. Use when asked to explain dilution, model a SAFE or priced round, size an option pool, understand a term sheet's economics, or figure out who owns what after a raise. Produces a worked ownership breakdown before/after the round, the dilution math step by step, and the traps founders miss. Not legal or financial advice.4---5
6# Cap Table Explainer Skill
7
8Dilution 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.**
9
10## Working from a brief
11
12Given 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]".
13
14## Required Inputs
15
16Ask for (if not already provided), else use labelled illustrative figures:
17- **Current ownership** (founders %, existing investors, current option pool)
18- **The round**: amount raised, pre- or post-money valuation, instrument (priced equity, SAFE, convertible note)
19- **SAFE/note terms** if any: cap, discount, MFN
20- **New option pool** target, and whether it's pre- or post-money ("the pool shuffle")
21
22## Output Format
23
24### 1. Plain-English summary
25What this round does to ownership, in 3 sentences.
26
27### 2. Ownership before → after
28
29| Holder | Shares / % before | % after this round |
30|---|---|---|
31| Founders | | |
32| Existing investors | | |
33| Option pool | | |
34| New investor(s) | | |
35| **Total** | 100% | 100% |
36
37### 3. The math, step by step
38- Post-money = pre-money + amount raised (or the reverse for post-money SAFEs)
39- New investor % = amount ÷ post-money
40- Show SAFE conversion (cap vs discount — whichever is better for the investor) explicitly
41- Show the **option pool shuffle**: a "pre-money pool" dilutes founders, not the new investor — quantify it
42
43### 4. What this costs the founder
44The single dilution number that matters, and the one term quietly driving it.
45
46### 5. Traps & watch-outs
47- Pre-money option pool (dilutes you, not the VC)
48- Stacked SAFEs converting at once (often more dilution than founders expect)
49- Liquidation preferences / participation (economics ≠ ownership %)
50
51## Quality Checks
52
53- [ ] Before/after table sums to 100% both columns
54- [ ] SAFE conversion uses the investor-favourable of cap vs discount, shown explicitly
55- [ ] The option-pool shuffle is quantified, not hand-waved
56- [ ] Includes the "not legal/financial advice — confirm with counsel" disclaimer
57
58## Anti-Patterns
59
60- Confusing pre- and post-money (the most common, most expensive error)
61- Ignoring the option pool's dilution effect
62- Treating ownership % as the whole story while ignoring liquidation preferences
63- Presenting math without stating assumptions
Mohit Aggarwal