Price Your Raise Around the Cap Table, Not the Valuation

A higher valuation with a worse structure routinely leaves founders owning less than a lower valuation with a clean one. The arithmetic is not complicated, it is just done after the celebration instead of before the term sheet.

The Three Terms That Actually Set Your Dilution

• The option pool shuffle. A new or topped-up pool is usually created pre-money, meaning existing shareholders, mostly you, absorb it entirely. A ten percent pool on a pre-money basis is roughly ten points of founder dilution that never appears in the headline number. Negotiate the size against a real hiring plan, and negotiate whether it sits pre or post.
• The SAFE and note stack. Instruments issued earlier convert at this round, at their caps and discounts. Several rounds of uncapped optimism converting at once can be a large, surprising block of the post-money table. Model the conversion before agreeing the price.
• Liquidation preference. A one-times non-participating preference is standard. Participating preferences, or multiples, change who gets what in every outcome except the best one. Founders accept structure in exchange for headline valuation and discover the cost at exit.

The Pool, Specifically

Size it from the hiring plan for the next eighteen months, role by role, with market grant sizes. An arbitrary fifteen percent because that is what the template said is expensive and, once granted, unrecoverable.

What to Do

1. Model the fully-diluted post-close table before negotiating the price.
2. Justify the pool from a written hiring plan, and push back on pre-money sizing.
3. Run exit waterfalls at a pessimistic, base and optimistic price.
4. Have the converting instruments reviewed together, not one at a time.

General information for Canadian founders, current to 2026. It is not tax advice and does not account for your specific facts. Rates, thresholds and rules change, confirm the current figures before acting.