Founding as a Developer — Validate Before You Build
A Cap Table Is a Ledger of Promises — Vesting, SAFEs, Dilution
In one line
Equity among co-founders is divided by what you earn over time (vesting), early investment (a SAFE) turns into shares at the next round, and at every round all shareholders are diluted by the newly created shares. If you calculate these three directly on a single cap table, you can see which of the numbers on the negotiating table reduces whose share.
This module is not legal, tax, or investment advice. The actual terms of a contract differ from document to document, and you should have a professional review it before you sign. The terms and numbers below are hypothetical examples for practicing the calculations.
Why this was needed
Three people started a company with equal shares. Eight months later one of them left, and he walked out holding his shares intact. The two who remained still have years of work ahead, yet the one who left is still a major shareholder. The next investor looked at this cap table and stopped negotiating.
Another team received two SAFEs and thought, "They are 2% and 2.5%, so we're giving up about 4.5% in total." When the seed round came with a condition to enlarge the option pool, the founders' shares shrank by a few percentage points more than expected. Every calculation was written in the contract — the people reading it simply had not calculated.
How it works
Vesting and the cliff. A commonly used form is "you earn shares in equal monthly portions over four years, but if you leave before completing the first year (the cliff), you earn none". This is not a rule set by law but a practice set by contract, and the terms differ from company to company. This lab defines it by counting full months: before the cliff it is 0, and after that you earn 주식 × 지난 달 수 ÷ 48 (rounded down) (the Korean words in the code mean shares, months elapsed), and the unearned share of someone who leaves is repurchased by the company and canceled.
Post-money SAFE. The SAFE documents page of Y Combinator states that for a post-money valuation cap SAFE, "the ownership sold is the investment amount divided by the valuation cap" — with a cap of 5 billion won and an investment of 100 million won, that is 2%. This percentage is based on the capital after all the other SAFEs have also been converted into shares, so when there are several SAFEs they dilute each other. If the sum of the two SAFEs' percentages is F, then for the pre-round shares C the sum of SAFE shares must be C × F / (1 − F) for each to hold its promised percentage. If you simply multiply the SAFE percentage by C, the investor's share comes out smaller than promised — a common calculation mistake. YC's primer on the post-money SAFE also states that this "post-money" does not include the option pool newly enlarged at the next round. In Korea, Article 2, item 1, sub-item (d) of the "Venture Investment Promotion Act" defines as one form of investment a conditional equity acquisition agreement under which "there is no repayment due date for the investment amount and no interest accrues", and leaves the detailed requirements to an ordinance of the Ministry of SMEs and Startups (checked on 2026-09-24).
A priced round and the option pool. The new investor takes 투자액 ÷ 포스트머니 (the Korean words in the code mean investment amount and post-money) of the post-money, which is the pre-money valuation (the company's value before the investment) plus the investment amount. One common condition is "so that the unallocated option pool is 10% of the total after the investment, the pool increase is put into the pre-investment share count". If the pool increase goes on the pre-money side, the price per share drops by that much, and that dilution is borne not by the new investor but by existing shareholders. That is why, separately from the announced pre-money, you must calculate the effective pre-money (price per share × the share count before enlarging the pool). This lab's formula sets the pool increase P as P = (p·D·k − U) / (1 − p·k) (D is the shares after SAFE conversion, U is the current unissued pool, p is the target ratio, k = post-money ÷ pre-money) and rounds down — it is the value that solves the simultaneous equations under this condition.
| Step | Who is diluted |
|---|---|
| SAFE conversion | Existing shareholders (founders and pool) |
| Pool increase (pre-money side) | Existing shareholders and the converted SAFE investors |
| New investment | Everyone, by the investor's share |
What it looks like in the field
- Because of equity split early on with no vesting, a co-founder who left remains a major shareholder.
- You take several SAFEs without calculating the combined dilution, and the founders' share at the seed round comes out lower than expected.
- The pre-money in the term sheet is 9 billion won, but because of the pool condition the effective pre-money is in the 8 billion won range (an example). You must negotiate with the effective number, not the announced one.
What you will do in the next lab
Using the cap table of the hypothetical company "Moanote", you calculate the vesting of the person who left and repurchase their shares, convert two post-money SAFEs, then apply a seed round that puts the pool increase into the pre-money, and build the final cap table. You also calculate how one founder's share shrank at each step and what the effective pre-money is. The grader also runs your functions against shaken conditions.