Tool 02 · the lab · Read: Ch. 21 — The Term Sheet · Ch. 24 — Cap Table Mechanics

VC Dilution & Option-Pool Solver

Enter the round. The solver computes the post-money, price-per-share, and dilution to existing holders. It also quantifies the option-pool shuffle: the term sheet's most quietly expensive line.

01 Pre-round cap table

Founder shares (M)

Existing investor shares (M)

Existing option pool (M)

Allocated and unallocated combined.

Of which unallocated

02 Round terms

Pre-money valuation ($M)

Investment ($M)

Target post-round option pool (% post-money)

Pool top-up timing

Pre-money: pool comes out of the founders. Post-money: everyone shares it.

Convention: single class of common, no SAFEs/notes converting in this round, no pro-rata participation, no anti-dilution adjustments. To model SAFEs, fold the as-converted shares into existing investor shares first.

03 Post-round cap table

Post-money valuation—

Price per share—

New investor shares (M)—

New options created (M)—

Total fully-diluted shares (M)—

04 Ownership %

Holder	Pre %	Post %	Δ

05 The option-pool shuffle, priced

If the pool comes pre-money, the founders fund 100% of it. If post-money, every existing holder shares the dilution.

06 Red flags

How the math works Effective pre-money = pre-money − pool top-up dollar value (when pool is pre).
Price per share = effective pre-money ÷ existing fully-diluted shares (after pool top-up if pre).
New investor shares = investment ÷ price per share.
Pool top-up is sized so unallocated options = target % × post-money fully diluted, after the round.

The shuffle, in plain English A founder with 80% takes a $5M investment at a $20M pre-money. They should expect to own 64% post (80% × 25/30). But if the term sheet asks for a 15% post-money pool, pre-money, the price per share drops, the investor still gets the same %, and the founder's slice drops to ~54%. The investor pays nothing for the pool. The founders pay for all of it. The number is small only if the pool you already had was close to the target.

Capability drill

A $4M raise on a $16M pre. The investor wants a 10% post pool, founders had 0%. How much extra dilution does pre-money pool create vs. post?

Round size = $20M post. Investor wants 20%. Post-money pool: founders + existing = 80% × (1 − 10%) = 72% — i.e. 8 points to the pool, 20 to the investor. Pre-money pool: investor still gets 20%, pool still 10%, but founders absorb the entire 10% — they end at 70%. ~2 points of extra dilution from one line on the term sheet.

Why might a founder agree to the pre-money pool anyway?

Because it preserves the headline pre-money valuation. The founder wants to tell the press "$20M pre"; the investor is happy with the lower effective price. Both look better than they are. The cost is real and shows up only in the cap table.