# Cap Table Example: How a VC Analyst Reads One in Diligence URL: https://accorata.com/journal/cap-table-example-vc-analyst-diligence Type: blog Locale: en Published: 2026-09-30 Updated: 2026-09-30 --- > A worked cap table example across Seed and Series A, read as a VC analyst would: option pool, dilution, fully diluted checks and who gets paid in an $18M exit. A cap table example is only useful if it shows what an analyst checks before the IC memo: who owns what after each round, what the option pool really costs, and who gets paid first in a weak exit. The worked example below runs two rounds, Seed and Series A, with every number traceable. Read it the way you would read a founder's spreadsheet on a Tuesday morning. ## What does a cap table example look like after a Seed round? Start with two founders holding 4,000,000 shares each, so 8,000,000 in total. They raise a $2M Seed at an $8M pre-money valuation. Post-money is therefore $10M, and the investor owns 20%, since $2M divided by $10M is 0.20. The Seed investor also asks for a 10% option pool, sized on the post-money cap table. That pool comes out of the founders' side of the deal, not the investor's. The founders' 8,000,000 shares must equal the remaining 70%, which gives a fully diluted count of 11,428,571 shares. - **Founder A**: shares 4,000,000, ownership 35.0%, worth $3.50M - **Founder B**: shares 4,000,000, ownership 35.0%, worth $3.50M - **Option pool**: shares 1,142,857, ownership 10.0%, worth $1.00M - **Seed investor**: shares 2,285,714, ownership 20.0%, worth $2.00M - **Total**: shares 11,428,571, ownership 100%, worth $10.00M The price per share is $2M divided by 2,285,714 shares, or $0.875. Every other row follows from that number. If the price per share does not reconcile with the round size and the share count, stop reading and ask why. The same arithmetic appears in a [published walkthrough by a securities lawyer](https://www.americanbar.org/groups/business_law/resources/business-law-today/2024-february/understanding-basics-cap-table-math-start-ups/) for a $1M investment at a $15M pre-money: $1M over $16M post-money is 6.25%. The method is the same at any size. ![Blank term sheet pages, calculator, pen and glasses on a slate desk](https://fdzlnqpwsaniezitwiuw.supabase.co/storage/v1/object/public/cms-media/accorata/2026-09/4a168a-inline1.webp) ## Why the $8M pre-money is really a $7M pre-money Look at the table again. The option pool sits inside the pre-money valuation, so the founders carry all of its dilution. Their 8,000,000 shares are worth $7.0M at $0.875, not $8M. This is the option pool shuffle, and it is standard. It is also the first thing an analyst should price. A headline pre-money of $8M with a 10% post-money pool is an effective $7M for the people building the company. Why does it matter to you as an investor? Because it tells you how hard the lead negotiated and how the founders reacted. A founder who understands the shuffle and still accepted it has priced the pool against a real hiring plan. A founder who did not notice it is a diligence signal of another kind. Skip any cap table example that shows a pool but never says whether it sits before or after the round. That single line decides who pays for it. ## How does a Series A row change everyone else? Now the company raises $6M at a $24M pre-money. Post-money is $30M, so the new investor owns 20%. The pool is topped up to 15% of the post-money cap table. The founders and the Seed investor receive no new shares. Together they hold 10,285,714 shares, and after the round they must represent the remaining 65%. That gives 15,824,175 shares in total, with 3,164,835 going to Series A and 1,230,769 new options going into the pool. - **Founders (combined)**: shares 8,000,000, after Seed 70.0%, after Series A 50.6% - **Seed investor**: shares 2,285,714, after Seed 20.0%, after Series A 14.4% - **Series A investor**: shares 3,164,835, after Seed none, after Series A 20.0% - **Option pool**: shares 2,373,626, after Seed 10.0%, after Series A 15.0% - **Total**: shares 15,824,175, after Seed 100%, after Series A 100% The Series A price is $6M divided by 3,164,835 shares, or $1.896, roughly 2.2 times the Seed price. The Seed investor's 20% became 14.4%, and the founders fell from 70% to 50.6% in two rounds. Nobody did anything wrong. This is ordinary dilution. ![A round tart cut into uneven slices on a dark boardroom table](https://fdzlnqpwsaniezitwiuw.supabase.co/storage/v1/object/public/cms-media/accorata/2026-09/fd5478-inline2.webp) The number to watch is founder ownership after the round you are considering. Below roughly 50% at Series A, the question of future motivation gets real. Above it, you are looking at a team that can still absorb two more rounds. That threshold is our rule of thumb, not a law, so state it as a judgment in the memo. ## Which line of the cap table example do you check first? Check the fully diluted share count before any percentage. Percentages are outputs. The share count is the input, and it is where errors hide. A fully diluted count assumes that every option, warrant and convertible converts into common shares. A [Breaking Into Wall Street guide to capitalization tables](https://breakingintowallstreet.com/kb/venture-capital/capitalization-table/) makes the same point: the table also records preferred terms and option exercise prices, which a plain share count hides. Reconcile three things in this order: - The sum of all rows equals the stated fully diluted total. - The round size divided by the new shares equals the stated price per share. - The new investor's percentage equals the round size divided by post-money. If all three tie, the arithmetic is sound and you can move to terms. If one fails, the founder's model is wrong or out of date. Either way, you learn something before the partner meeting. ## What the cap table example says about an $18M exit A cap table lists ownership. It does not say who gets paid first. For that you need the liquidation preferences, and in this example both investors hold 1x non-participating preferred. Take an $18M sale. Series A as-converted would receive 20%, or $3.6M, which is less than its $6M preference. So Series A takes the $6M and leaves the common pool. That leaves $12M for everyone else. The Seed investor then compares its $2M preference with its as-converted share of the remaining $12M. As-converted it gets about $2.17M, so it converts. The founders and the option pool split the rest. - **Founders**: ownership 50.6%, proceeds at $18M $7.58M, share of proceeds 42.1% - **Seed investor**: ownership 14.4%, proceeds at $18M $2.17M, share of proceeds 12.0% - **Series A investor**: ownership 20.0%, proceeds at $18M $6.00M, share of proceeds 33.3% - **Option pool (fully issued)**: ownership 15.0%, proceeds at $18M $2.25M, share of proceeds 12.5% Series A owns 20% and collects 33% of the proceeds. The founders own 50.6% and collect 42%. Raise the exit to $60M and everyone converts: Series A takes $12.0M, the founders $30.3M, the Seed investor $8.7M and the pool $9.0M, each exactly in line with ownership. ![Water cascading down granite steps, one tier feeding the next](https://fdzlnqpwsaniezitwiuw.supabase.co/storage/v1/object/public/cms-media/accorata/2026-09/7c5558-inline3.webp) The assumption worth flagging is the pool. We treated it as fully issued and vested, which overstates what employees would receive. In a real waterfall, unissued options drop out and every other holder's share rises slightly. Say which version you ran. ## Five things to flag in a real cap table A textbook cap table example is clean. The ones that land in your inbox are not. These are the flags we write down first. - **Unconverted SAFEs or notes.** If they do not appear as rows, the percentages are overstated for everyone. Ask for the conversion terms and run the table both ways. - **A pool that is too small or too large.** Under 8% before a hiring push means a top-up that dilutes you next round. Over 20% at Seed suggests the founders conceded too much in negotiation. - **Participating preferred or a multiple above 1x.** Both change the waterfall materially and deserve a line in the memo, not a footnote. - **Dead equity.** A departed cofounder holding 15% with no vesting left is a governance problem that a clean table will not reveal. - **Advisor and angel stacks.** Ten small holders are fine. Ten small holders with side letters and pro-rata rights need a call with the company's lawyer. None of this means pass. It means your memo should state the risk and the price you put on it. Coverage before conviction. ## Where the cap table sits in your diligence workflow A cap table is a record, not a legal document. The Breaking Into Wall Street guide says so directly: it is not part of the articles of incorporation or the shareholder agreement. Always reconcile it against the signed documents before you rely on it. In practice, the check takes three sources. The founder's cap table gives you the structure. The signed financing documents give you the terms. An external data source gives you the round history, so you can see whether the stated prior valuations match what the market recorded. For the last step, a private-market data platform such as PitchBook shows disclosed round sizes and investors, which is enough to test the founder's story on prior rounds. The relationship side matters too. Whoever at your fund owns the founder relationship should log the cap table version, the date received and the open questions in the CRM, so that the next analyst does not ask the same thing twice. Then the memo itself. A one-page cap table check belongs in the IC memo as a short section: current ownership, post-round ownership, preference stack, and your three flags. A shared workspace with a fixed template keeps the format identical from deal to deal. ## Should you build the cap table yourself? For a Seed or pre-seed deal, yes. Rebuild the post-round table in a spreadsheet from the term sheet, even if the founder sent one. It usually takes under an hour, and you will find more errors than a read-through would. For later rounds, use the company's own model, then test the three reconciliations above. Dedicated cap table software is common by Series A, and the exports are usually clean. The risk moves from arithmetic to terms, so spend your time on the preference stack and the pro-rata rights. What we would skip: anything that shows you only a pie chart of ownership. A pie chart hides the price per share, the preferences and the pool timing, which are the three things that change your return. If you want a first-draft screen of each inbound deal, with the cap table reconciled before the Monday morning shortlist, book a briefing with Accorata. ## FAQ ### What is a cap table example in venture capital? It is a spreadsheet showing each holder, their shares, ownership percentage and price per share after each round. In our example, founders hold 70% after a $2M Seed at $8M pre-money. ### How do you calculate ownership in a cap table? Divide the investment by the post-money valuation for the new investor. A $2M investment at $10M post-money gives 20%. Existing holders then share the remaining 80% in proportion to their shares. ### What does fully diluted mean on a cap table? Fully diluted counts every share that could exist if all options, warrants and convertibles converted into common stock. Use it as the denominator for ownership, not the shares currently outstanding. ### Why does the option pool sit in the pre-money valuation? Investors usually want the pool created before their money arrives, so the founders bear its dilution. In our example an $8M headline pre-money is effectively $7M for the founders. ### Do liquidation preferences change who gets paid in an exit? Yes. With 1x non-participating preferred, an investor takes the greater of its preference or its as-converted share. At an $18M exit, Series A takes $6M, about 33% of proceeds, despite owning 20%. ### Is a cap table legally binding? No. It is a reference record. The signed financing documents and shareholder agreement control, so reconcile the table against them before relying on it in an IC memo.