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The valuation everyone’s celebrating might be quietly moving your ownership to the margins. Cap Table stays with the numbers buried in term sheets, cap tables, and board slides—the small print...
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The valuation everyone’s celebrating might be quietly moving your ownership to the margins. Cap Table stays with the numbers buried in term sheets, cap tables, and board slides—the small print that decides who actually owns the company you’re building and how that shifts round by round. Each case takes one real fundraising decision and works it through line by line: pre- and post-money math, how an option pool tweak changes outcomes, what a “headline” price really means once dilution is accounted for, and how the cap table evolves over time. Expect clear, stepwise walkthroughs that make sense of jargon and reveal the trade-offs founders accept when they pick one term set over another. It’s practical, spreadsheet-level storytelling that favors arithmetic over lore, helping builders understand where their shares go, what the percentages look like after the dust settles, and why small differences in a term sheet can compound into big changes in control and eventual payout.
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Episodes & Posts
Episodes
Posts
26 NOV 2025 · Warrants are options that lenders or investors get as a sweetener. They're usually small (5-10% of the round size) and easy to ignore. That's the mistake. This episode walks through how warrants work and why they're actually a second, hidden dilution event. A warrant is the right to buy shares at a specific price (the exercise price) at any point in the future. If your company raises at a $50M valuation and the lender gets a warrant to buy 5% of the company at a $50M valuation cap, they can exercise that warrant at any time. If your company is later valued at $500M, that warrant is worth a fortune, and when they exercise it, your ownership percentage gets diluted. We use a real example: a company raised a $2M convertible note with a 5% warrant. The warrant had a $20M valuation cap. Three years later, the company was valued at $200M in a Series B round. The warrant holder exercised their warrant, buying 5% of the company at the $20M cap price. This diluted all existing shareholders by 5%. For the founders, this was a surprise because they'd negotiated the convertible note terms but hadn't focused on the warrant. The episode covers when warrants are reasonable (some lenders require them as compensation for risk) and when they're excessive (when you're being asked to give warrants on top of a high interest rate and a low maturity date). We close with the calculation framework: what's the fully-diluted impact of this warrant if the company is worth 5x, 10x, or 20x the current valuation?
29 OCT 2025 · Convertible debt is supposed to be faster and cheaper than equity rounds. It's neither. This episode unpacks the hidden costs of convertible notes, which are often structured with interest rates (typically 5-8%) and maturity dates (usually 2-3 years). The interest rate compounds, and if the note hasn't converted by maturity, you owe the principal plus accumulated interest in cash. We walk through a real scenario: a company raised $1M in convertible notes at 6% interest with a 2-year maturity. They didn't raise a priced round in those 2 years, so the notes matured. The company owed $1.12M in cash plus the original $1M, and they didn't have the cash to pay it back. This forced them into a down round at a terrible valuation just to pay off the notes. The episode also covers the conversion mechanics: when a priced round happens, the note converts at a discount (usually 20-30%) and a valuation cap. If you raise a Series A at $50M post-money, and your convertible note had a $30M cap, you convert at the cap, not the Series A price. That's actually good for the note holders and bad for the Series A investors. We also discuss the scenario where convertible debt is genuinely useful (bridge financing between rounds, quick capital when you don't have time for a full process) and when it's a trap (when you're using it to avoid the hard conversations about valuation).
15 OCT 2025 · Most founders don't realize they're on a vesting schedule too. If you leave the company, your equity doesn't automatically stay with you. This episode covers founder vesting mechanics, which are often negotiated as part of the Series A term sheet. The standard structure is 4-year vesting with a 1-year cliff, same as employees. But there's a critical difference: if a founder leaves after 18 months, they've only vested 37.5% of their equity. The other 62.5% either goes back to the company or gets transferred to the remaining founders. We walk through a real case where a founder was pushed out by their board after 2 years (due to a disagreement about strategy), and they only took home 50% of their original equity stake. The other 50% went back into the option pool for new hires. The episode covers the negotiation points: can you negotiate a shorter vesting schedule, what happens to your equity if you leave voluntarily versus get fired, and whether you can negotiate acceleration (where some or all of your equity vests immediately) if the company is acquired. There's also the uncomfortable scenario: what if the board decides to fire you and then re-hires you as an employee at a lower salary to avoid severance obligations? We close with the practical steps: understand your vesting schedule before you sign the term sheet, negotiate single-trigger acceleration for acquisitions if possible, and have a conversation with your co-founders about what happens to unvested equity if someone leaves.
1 OCT 2025 · The option pool is the equity set aside for employees. It sounds fair until you realize it's negotiated by the VC and the founder, and the VC almost always wins. This episode walks through how option pools are calculated and why the standard 15-20% pool is actually a hidden dilution mechanism. When a VC agrees to a $50M post-money valuation, they're often conditioning that valuation on setting aside a 20% option pool. That means the founders' ownership percentage is calculated on the 80% of the company that remains after the pool is set aside. If the option pool is then expanded later (which happens constantly as the company hires more senior people), the founders absorb all the dilution. We use a real example: a Series A company set aside a 15% option pool at the time of the round. By Series B, they'd hired 15 people and needed to expand the pool to 25% to recruit senior engineers and a CFO. The founders weren't expecting that expansion, and it hit their ownership percentages hard. The episode also covers the mechanics of how options vest (typically 4-year vesting with a 1-year cliff), why that structure matters, and what happens to unvested options if the company is acquired or goes under. We close with the negotiation framework: how to push back on option pool size, when to set aside more or less, and how to structure the pool so it doesn't become a surprise dilution event later.
17 SEP 2025 · Board seats come with power, prestige, and legal liability. They also come with information asymmetries that can destroy your equity value. This episode examines what happens when a VC takes a board seat and uses that position to make decisions that benefit their fund at the expense of founders. We walk through a real case where a board member pushed for a strategic pivot that made sense for the VC's portfolio (they had other portfolio companies in the same space) but diluted the company's focus and burned cash faster. The founder, also on the board, had the same information as the VC but less power to stop the decision. The episode covers the structural reasons why board dynamics favor investors: they control the board majority, they have more experience with these decisions, and they have financial incentives that don't always align with founder incentives. We also explore the information problem: as a founder on the board, you're supposed to represent all shareholders, not just yourself, which creates a conflict when your interests diverge from the investors'. The episode includes a real conversation where a founder realized too late that their board seat came with obligations that prevented them from advocating for their own equity value. We close with the practical framework: what to push for in board composition, when to raise concerns about board decisions, and how to protect yourself legally when you're on a board that's making decisions you disagree with.
20 AUG 2025 · Every institutional investor gets preferred stock. Founders get common stock. This structural difference is the reason founders often end up with nothing even when a company is worth hundreds of millions. This episode breaks down the liquidation waterfall — the order in which money gets distributed when a company sells, goes public, or goes under. We use a real acquisition scenario: a company valued at $200M gets acquired for $180M. Sounds like a loss, but the preferred stockholders (the VCs) get paid first, in full, plus their liquidation preferences (usually 1x non-participating). After the VCs get paid, there's $50M left for the common stockholders (the founders and employees). Except the preferred stock also has participation rights, which means they get to double-dip: they get their preference, and then they participate in the remaining proceeds like common stockholders. One founder we interviewed thought they owned 15% of a company valued at $200M. When it sold for $180M, their liquidation preference meant they got $0 because all the proceeds went to paying off the preferred investors' preferences and participation rights. The episode walks through how to calculate what you'll actually get in different exit scenarios, and the one question that can save you from this trap: what's my ownership percentage on a fully-diluted basis, and what are the liquidation preferences and participation rights on every share class above mine?
6 AUG 2025 · Down rounds are the worst-case scenario that nobody wants to admit until it's happening. This episode walks through a real down round at a Series B company that raised at $50M, burned through capital faster than expected, and had to raise again at $30M just 18 months later. The math gets brutal fast. Existing investors often have anti-dilution protections that kick in during down rounds, which means founders absorb most of the ownership hit. We map out the two types of anti-dilution clauses (weighted-average and full ratchet) and show exactly how much ownership gets transferred from founders to earlier investors in each scenario. The episode includes the conversation a founder had with their lead investor about whether to push for weighted-average anti-dilution or accept full ratchet in exchange for a higher post-money valuation. There's also the uncomfortable truth: sometimes the board votes to take a down round not because it's the best option, but because it's the only option and the investors need to signal momentum to their LPs. We close with the decision tree every founder should work through before accepting a down round, including when to push back and when to recognize that taking the down round is actually the least bad choice.
23 JUL 2025 · SAFEs were supposed to be simple and founder-friendly. They're neither. This episode unpacks the three conversion scenarios that actually matter: conversion on a priced round, conversion on an IPO, and the scenario nobody talks about — what happens when your company is acquired before conversion. We use a real example of a company that raised $2M on SAFEs at a $10M post-money valuation, then got acquired for $15M. The founders thought they'd done well. Then the SAFE converted, the MFN clause triggered, and their ownership got recalculated. One founder ended up with 40% less equity than they expected. The episode walks through the math step by step: how the discount rate works, why the valuation cap matters more than the discount in most scenarios, and what the most-favored-nation clause actually does to your cap table when multiple SAFEs exist at different terms. We also cover the one scenario where SAFEs genuinely favor founders and when you should push back on the standard template.
9 JUL 2025 · Most founders think the first money in is a celebration. It's actually the moment your ownership percentage starts its inevitable decline. This episode maps the mechanics of a typical seed round through the lens of ownership dilution, using a real $500K seed check as the anchor. We walk through how a standard 20% equity pool for employees actually works on your cap table, why VCs insist on certain liquidation preferences before they write the check, and what happens to your voting rights when someone else owns a bigger piece than you do. By the end, you'll understand why a $10M valuation on a seed round can feel like a win but mathematically set you up to own less than 10% of your own company by Series C. The episode closes with the single most important question to ask your lawyer before signing: what percentage do I actually own after this round, and what percentage will I own if we raise again at 2x this valuation?
The valuation everyone’s celebrating might be quietly moving your ownership to the margins. Cap Table stays with the numbers buried in term sheets, cap tables, and board slides—the small print...
show more
The valuation everyone’s celebrating might be quietly moving your ownership to the margins. Cap Table stays with the numbers buried in term sheets, cap tables, and board slides—the small print that decides who actually owns the company you’re building and how that shifts round by round. Each case takes one real fundraising decision and works it through line by line: pre- and post-money math, how an option pool tweak changes outcomes, what a “headline” price really means once dilution is accounted for, and how the cap table evolves over time. Expect clear, stepwise walkthroughs that make sense of jargon and reveal the trade-offs founders accept when they pick one term set over another. It’s practical, spreadsheet-level storytelling that favors arithmetic over lore, helping builders understand where their shares go, what the percentages look like after the dust settles, and why small differences in a term sheet can compound into big changes in control and eventual payout.
show less
Information
| Author | 3Peaks |
| Organization | 3Peaks |
| Categories | Business , Entrepreneurship |
| Website | www.spreaker.com |
| ops@3peakspodcasts.com |
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