IGNITE EXTENDED / LESSON 30
Who owns what after a priced round and an option pool?
A reconciled cap table with an explicit pool definition.
A priced round adds newly issued shares. Pre-money value describes the negotiated value before the new investment, on a specified capitalization basis. Post-money value adds the new investment under the simple cash-in model.
Divide pre-money value by the agreed pre-round share count to obtain the price per share. Divide investment by that price to obtain new shares. Recompute all percentages using the post-round denominator. Existing holders can retain the same number of shares while their percentage declines.
A pool reserves equity for future grants on the basis specified in the transaction. The phrase “10% pool” is incomplete without knowing whether it means a percentage before or after the round and whether existing grants or reserves count toward it.
In the source cap-table example, the next investor contributes $10 million at $30 million post-money with a 10% post-money unallocated pool. The investor owns 33.333% and the pool owns 10%, leaving 56.667% for the existing 11 million shares.
$8 million pre-money + $2 million investment = $10 million post-money; new investor owns 20%.
A pool established as part of the pre-money capitalization generally changes the ownership and pricing of the existing holders before the new investor receives the negotiated percentage. A pool added afterward can also dilute the new investor. The precise result follows the actual definitions.
Compare offers using the same fully diluted basis and the same target pool. A higher headline valuation can be offset by a larger required pool. Convert the terms into share counts so that the comparison does not depend on ambiguous percentages.
A cap table answers who holds shares or other interests on a defined basis. It does not by itself describe all payout or voting consequences. Different classes can have different rights even when their percentage ownership appears similar.
Check that shares sum to the stated total and percentages sum to 100%. Reconcile investment, price and shares issued. Then link each class to the relevant terms. This keeps the mechanical ownership calculation separate from the later lesson on liquidation preferences.
Carta's data for software rounds raised in the six months to July 2026 show median seed dilution of 18% and a median seed of $4.1M at a $24.3M valuation. Relay's illustrative $4M at $20M post (20% sold) is close to the market; a lead asking for 25–30% would be well above the median.
Carta reported in June 2025 that the median option pool after a seed round is about 12%, that companies typically use 60–70% of the pool before the next raise, and that requests for 15–20% are usually too large. A hiring plan is the founder's best argument on pool size.
Under the standard post-money SAFE, a pool increase made in connection with the priced round is excluded from the capitalization used to convert the SAFE. SAFE holders keep their fixed percentage of the pre-round capitalization, and founders bear the top-up. In Relay's seed, the SAFE converts at $0.9545 into 1,571,429 shares whatever pool the seed lead demands. Exact treatment depends on the documents signed; confirm with counsel.
Sources: Carta: VC startup fundraising benchmarks from 1,000 rounds (July 2026) · Carta: Founders should push back on 20 percent option pool requests · Torys: Pre-money versus post-money SAFE: what's the difference (and does it matter)?
Founders hold 10m shares, the pre-seed investor holds 1m and no unallocated pool exists. A new investor contributes $10m at $30m post-money. The terms require an unallocated pool equal to 10% of post-money fully diluted shares. Use the source’s simple priced-round definitions and ignore other instruments.
Solve the fully diluted total, new investor shares, pool shares, price and founder ownership. Reconcile all percentages.
Month 16. Relay has 10,000,000 founder shares (Maya 5.2M, Daniel 4.8M), a 1,000,000-share pool with 400,000 options granted (Priya 300,000, two engineers 50,000 each), and $1.5M of post-money SAFEs at a $12M cap that convert into 1,571,429 shares at $0.9545. The seed lead offers $4,000,000 at $16,000,000 pre-money ($20M post) and requires the unallocated pool to be 10% of post-money fully diluted shares, with the top-up counted in the pre-money.
Produce a reconciled post-seed cap table (shares, percentage, value at the seed price) for every holder, with the pool equation written out, the seed price, the new pool shares, and the effective pre-money valuation for existing holders.
Ten percent of the pre-round shares, of the post-money total, granted plus unallocated, or unallocated only: each gives a different share count and price. Write the equation (others / (1 - investor% - pool%)) into the term sheet discussion and check it against share counts.
A larger pool counted in the pre-money transfers value from existing holders to future hires. Convert every offer to effective pre-money (existing shares x price): Relay's $16M headline is $14.0M to the people already on the cap table.
An oversized pool permanently dilutes founders by the unused amount, and unused options do not return value to them. Size the pool from a hiring plan to the next round using a grant chart, and argue down a 15–20% request with that plan.
Relay's reconciled post-seed cap table: 17,102,041 fully diluted shares at $1.1695, with Maya 30.41%, Daniel 28.07%, SAFE holders 9.19%, granted options 2.34%, unallocated pool 10.00% and seed 20.00%, plus the $14.0M effective pre-money and a hiring-plan argument on pool size.
Next lesson: Multiple rounds, dilution & the VC method
Check your understanding
Question 1
Relay's seed: $4M at $16M pre-money, unallocated pool topped up to 10% post-money inside the pre-money. Founders, converted SAFEs and granted options total 11,971,429 shares. What is the seed price per share?
T = 11,971,429 / 0.70 = 17,102,041; seed shares = 20% x T = 3,420,408; price = $4M / 3,420,408 = $1.1695. $1.2727 divides $16M by the pre-round shares without the new pool, and $0.9545 is the SAFE cap price.
Question 2
In the same round, what effective pre-money valuation do Relay's existing holders (founders, SAFE holders and granted options) receive?
11,971,429 shares x $1.1695 = $14.0M. The remaining $2.0M of the headline pre-money is the 1,710,204-share unallocated pool. Because the pool sits in the pre-money, its whole cost falls on existing holders and none on the seed investor.
Question 3
Founders hold 8,000,000 shares and nothing else is outstanding. An investor puts in $3M at $12M post-money and requires a 15% post-money unallocated pool. What is the price per share?
The investor gets 25% and the pool 15%, so founders keep 60%: T = 8M / 0.60 = 13.33M shares. Investor shares = 3.33M, price = $0.90. The founders' effective pre-money is 8M x $0.90 = $7.2M, not the $9M headline.
Question 4
After the seed, Priya notices her 300,000 options fell from 2.39% of Relay to 1.75% and asks whether her grant was cut. What is the accurate answer?
Dilution reduces percentages, not share counts. Her 300,000 options were 2.39% of 12,571,429 and are 1.75% of 17,102,041, while the price per share rose about 23%. Anti-dilution provisions protect preferred investors against down rounds, not employees in up rounds.
Question 5
Relay receives a second term sheet: $4M at $18M pre-money with a 15% post-money pool in the pre-money. Compared with $16M pre and a 10% pool, which statement is correct?
Under the $18M offer the investor takes 4/22 = 18.18%, others keep 66.82%, T = 17,916,424 and the price is $1.2279, so existing shares are worth $14.7M. Maya's percentage is lower because the larger pool is counted, but her shares are worth more ($6.39M vs $6.08M). Compare effective pre-money, not headline numbers.
Question 6
Suppose Relay's seed were priced on the 12,571,429 pre-round shares ($1.2727) and the pool were topped up to 10% only after the investment. What percentage would the seed investor end with?
The seed buys 3,142,857 shares (20% of 15,714,286). Topping the pool up to 10% after the investment adds 1,079,365 shares, for 16,793,651 in total, so the seed holds 18.71%. A post-money top-up shares the dilution with the new investor, which is why investors insist that the pool sit in the pre-money.
Workbook
Module output: A capital strategy, cap table, financing comparison and milestone-based funding plan.
Library
4 appear in the slides with notes; the rest are kept here for reference.
Source S31 · Beyer · 69 pages
Source S42 · Reiss · 5 pages
Source S40 · Reiss · 59 pages
