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A step-by-step guide to modeling multiple funding scenarios in your cap table, including SAFEs, convertible notes, option pool adjustments, priced rounds, exits, and more.
Farheen Shaikh
November 21, 2025
November 22, 2025
Table of Contents
Modeling different funding scenarios isn’t just a “nice to have”; it’s one of the most important parts of founder decision-making. Every round of financing changes ownership, control, dilution, and the value of each share. A cap table that supports scenario modeling helps you predict these outcomes before committing to a raise, letting you make decisions with clarity.
In this guide, we break down exactly how to simulate multiple funding scenarios in a cap table and which tools founders, CFOs, and investors rely on to do it.
Begin by setting up your current ownership structure. This becomes the foundation for every scenario you create.
Include:
Your baseline should reflect the exact number of fully diluted shares. This includes:
Modeling with fully diluted shares provides an accurate view of total potential equity and prevents underestimating dilution.
Each scenario depends on the specific inputs or assumptions you choose to model.
These inputs describe the terms of the round you are simulating, and even small changes can meaningfully shift ownership outcomes.
For each scenario, outline:
These assumptions help you see how small changes in valuation, dilution terms, or round size affect ownership.
Once your assumptions are ready, create several versions of how the company might raise money. This lets you compare outcomes side by side.
Examples:
The goal is to understand how different fundraising paths change dilution and long-term ownership.
Next, model how each instrument converts into shares.
Convert each instrument based on:
Accurate conversion is essential because SAFEs and notes almost never convert at the same price as new investors. Their caps and discounts give them more shares for the same investment amount, which increases dilution for founders and early shareholders.
Sometimes new investors in a priced round require increasing the ESOP pool to ensure enough equity is available for future hiring.
These pool expansions almost always happen before the new investor comes in, which means the dilution falls mostly on founders and early shareholders. It’s one of the most common sources of unexpected dilution, so it should always be modeled explicitly.
With all assumptions and conversions applied, your cap table should now show the final fully diluted structure for each scenario.
You should be able to compare:
This comparison helps you understand which fundraising path leads to the healthiest long-term cap table and which one creates unnecessary dilution.
Now that the mechanics of scenario modeling are clear, this section shows how the numbers actually play out.
Assume the company currently has:
Total fully diluted shares: 1,200,000
This will be our reference point across scenarios.
| Stakeholder | Shares | Ownership |
|---|---|---|
| Founders | 1,000,000 | 83.33% |
| Options (unallocated) | 200,000 | 16.67% |
| Total | 1,200,000 | 100% |
The company raises a $1M SAFE at a $5M cap, then raises a Seed round at a $7M pre-money valuation with a $2M investment.
During the priced round, the SAFE converts at its $5M cap because it is lower than the round valuation. If the round valuation were below the cap, the SAFE would instead convert at the round price.
Conversion price
= $5,000,000 cap ÷ 1,200,000 shares
= $4.17 per share
SAFE shares issued
= $1,000,000 ÷ 4.17
≈ 239,808 shares
Seed share price
= $7,000,000 ÷ (1,200,000 + 239,808)
≈ $4.9 per share
Seed shares issued
= $2,000,000 ÷ 4.9
≈ 408,163 shares
| Stakeholder | Shares | Ownership |
|---|---|---|
| Founders | 1,000,000 | 54.11% |
| Options (unallocated) | 200,000 | 10.82% |
| SAFE investor | 239,808 | 12.98% |
| Seed investor | 408,163 | 22.09% |
| Total | 1,847,971 | 100% |
Assume the company raises two SAFEs before the Seed round:
SAFE A share price
= $4,000,000 ÷ 1,200,000 shares
= $3.33 per share
Shares issued
= 500,000 ÷ 3.33
≈ 150,150 shares
SAFE B share price
= $6,000,000 ÷ 1,200,000 shares
= $5 per share
Shares issued
= 500,000 ÷ 5
= 100,000 shares
Total shares after SAFEs: 1,450,150
Seed share price
= $7,000,000 ÷ 1,450,150
≈ $4.83 per share
Seed shares issued
= $2,000,000 ÷ 4.83
≈ 414,078 shares
| Stakeholder | Shares | Ownership |
|---|---|---|
| Founders | 1,000,000 | 53.64% |
| Options (unallocated) | 200,000 | 10.73% |
| SAFE A | 150,150 | 8.05% |
| SAFE B | 100,000 | 5.36% |
| Seed investor | 414,078 | 22.22% |
| Total | 1,864,228 | 100% |
Earlier, pre-money SAFEs were more common in the ecosystem. In that structure, all SAFEs convert together before the priced round, which means they dilute the founders and also dilute one another, making pre-money SAFEs generally more founder-friendly. Today, companies more often use post-money SAFEs, where each investor’s ownership is fixed in advance. As a result, SAFEs no longer dilute each other; instead, the full dilution falls on the founders and existing shareholders, as shown in our example.
The company previously raised a $500k convertible note on the following terms:
The note tests two prices; the lower applies:
To simplify modeling, we proceed using the cap price.
Note amount ÷ conversion price
= $500,000 ÷ 5
= 100,000 new shares
Updated shares before pool expansion:
1,200,000 + 100,000 = 1,300,000
The company has an existing pool of 200,000 options, but the new investor wants the pool expanded before the round so that it represents 15% of the cap table on a pre-money basis. Since the expansion happens before the round, the dilution falls entirely on the founders and existing shareholders.
Let X = new pool size (after expansion).
X = 15% of total shares post-expansion.
Equation:
X = 0.15 × (1,300,000 + X)
Solve:
X = 195,000 + 0.15X
0.85X = 195,000
X ≈ 229,411 shares
Existing pool = 200,000
New pool shares added = 29,411
Total shares before priced round:
1,300,000 + 29,411 = 1,329,411
The company raises $2M at an $8M pre-money valuation.
Round share price:
$8,000,000 ÷ 1,329,411
≈ $6.02 per share
Shares issued to the Seed investor:
$2,000,000 ÷ 6.02
≈ 332,225 shares
| Stakeholder | Shares | Ownership |
|---|---|---|
| Founders | 1,000,000 | 60.18% |
| Options (unallocated) | 200,000 | 12.04% |
| Options added to the pool | 29,411 | 1.77% |
| Convertible note | 100,000 | 6.02% |
| Seed investor | 332,225 | 19.99% |
| Total | 1,661,636 | 100% |
Before distributing proceeds, all SAFEs and notes convert so ownership is correctly reflected. Exit modeling follows a strict order because each security type has specific payout rights.
Using Scenario 2’s structure:
SAFE A and SAFE B convert at their caps. Safe holders now participate as shareholders.
Investors who participated in priced rounds typically hold preferred shares, which entitle them to receive their original investment amount (or a multiple, depending on the terms) before common shareholders receive proceeds. In Scenario 2, the Seed investor has a 1x non-participating preference, so they receive their $2M investment first.
Remaining proceeds:
$50M − $2M = $48M
After preferences are satisfied, the remaining exit value is shared proportionally according to each stakeholder’s final fully diluted ownership.
Unallocated pool shares do not participate in exit proceeds.
The 10.73% unallocated ESOP portion is removed, and its economic share is redistributed proportionally among actual shareholders. This creates payout-adjusted ownership percentages.
After removing unallocated ESOP, the new effective ownership is:
| Stakeholder | Fully diluted % | Adjusted % for payout |
|---|---|---|
| Founders | 53.64% | 60.09% |
| Options (unallocated) | 10.73% | - |
| SAFE A | 8.05% | 9.02% |
| SAFE B | 5.36% | 6.01% |
| Seed investor | 22.22% | 24.88% |
| Total | 100% | 100% |
These adjusted payout percentages determine how the remaining $48M is split.
Pro-rata distribution of $48M (after paying Seed’s $2M preference).
Disclaimer
The information provided by E-List Technologies Pvt. Ltd. ("EquityList") is for informational purposes only and should not be considered as an endorsement or recommendation for any investment, product, or service. This communication does not constitute an offer, solicitation, or advice of any kind. Any products, or services referenced will only be undertaken pursuant to formal offering materials, agreements, or letters of intent provided by EquityList, containing full details of the risks, fees, minimum investments, and other terms associated with such transactions. Please note that these terms may change without prior notice.EquityList does not offer legal, financial, taxation or professional advice. Decisions or actions affecting your business or interests should be made after consulting with a qualified professional advisor. EquityList assumes no responsibility for reliance on the information/services provided by us.
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