The cap table is the company's ledger of who owns what. A founder running a $30M Series B with no fully-diluted cap table model is flying blind — and most founders, before professional CFO infrastructure, are doing exactly that.
The five classes
Common stock: founders, employees, ex-employees post-vest. Preferred: each financing round (Series Seed, A, B, C…) gets its own series with negotiated rights. Options: outstanding employee options, both vested and unvested, plus the unallocated reserve. SAFEs and convertible notes: pre-priced instruments that convert into preferred at the next priced round, with caps and discounts. Track each class separately and reconcile to share count.
Fully diluted share count assumes every option, warrant, SAFE, and note has converted. This is the basis on which ownership percentages are computed. Quoting ownership on issued-and-outstanding (which excludes options and convertibles) is misleading and most LP/diligence teams will catch it.
SAFEs and convertible notes
A SAFE (Simple Agreement for Future Equity) converts into preferred at the next priced round. Two key terms: cap (the maximum effective valuation at which the SAFE converts) and discount (a percentage discount to the next-round price). Y Combinator's post-money SAFE is the modern standard. SAFEs do not accrue interest; convertible notes do.
Conversion math: if a SAFE has a $10M cap and the next round prices the company at $20M, the SAFE converts at $10M — the SAFE-holder gets twice the shares per dollar that new investors get. The post-money cap structure (vs. pre-money) determines whether dilution from SAFEs falls on founders or on new investors.
Modelling a new round
To model a new round: take the pre-money valuation, add any convertibles at their conversion terms, add the option-pool top-up, then compute new investor ownership as (new investment) ÷ (post-money including all of the above). Re-balance the table; reconcile every share class to a final share count. Sophisticated cap-table tools (Carta, Pulley) automate this; the underlying math is something every Series-A and later founder must understand.