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Paper Money

Build a company’s cap table one event at a time: SAFEs, convertible notes, priced rounds, down rounds. Watch your slice shrink, your paper wealth swing, and what it’s worth when the company finally sells or goes public.

Switching roles starts a fresh timeline.

Timeline

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The exit

Explore the exit

You take home $73.5M $18.4M of it vested; the other $55.1M keeps vesting as buyer stock.

You own 45% of the company but receive 49% of the sale price.

Where every dollar goes

  • Bankers & lawyers $3M · 2%
  • You $73.5M · 49%
  • Your cofounder $73.5M · 49%
The payout, step by step
  1. Bankers & lawyers $3M
  2. Common stock $147M

Your payout at every sale price

$0$100M$200M$300M$3M$10M$30M$100M$300M
This cap table

That’s before tax. See what ISOs, NSOs and RSUs each leave you →

About this tool

Who it's for
For founders raising money and early employees weighing options, plus anyone who wants to see how a cap table works.
What you can enter
Founder shares, your split and the option pool, then a timeline of SAFEs, convertible notes, priced rounds and down rounds with their terms, option grants and leaving the company, and an acquisition or IPO at any price.
What it runs on
A simulation of cap table mechanics (post-money SAFEs, convertible notes, priced rounds with pool top-ups, anti-dilution and repricing, liquidation preferences, sale or IPO), before tax. Sources and simplifications are under How this is calculated.
Who made it
Sam Wen, co-founder of Square. Free, no sign-up; it runs in your browser. Last updated .

Worked example: What a down round does to an early employee’s options.

Spot a mistake, or a rule that changed? Tell me.

Frequently asked questions

I own 1% of a company valued at $500M. Am I worth $5M?

Only on paper, which is the point of the name. The $500M is the price of the newest preferred share times every share, and your common shares don't have preferred's rights. In a sale, 2% goes to bankers and lawyers, every preferred class takes its money back (or more) before common sees a dollar, and options pay only the amount above their strike. Build the cap table, then drag the sale price: the gap between "On paper" and "You take home" is what the headline leaves out.

Why do I sometimes get more than my ownership percentage?

Because the unallocated option pool counts in fully diluted ownership but gets nothing in a sale. It simply disappears, and every real shareholder's slice of the proceeds grows. A founder who owns 45% next to a 10% empty pool takes about 49% of the price in a clean sale, even after the 2% in fees.

What happens to my options in a down round?

Three things, usually. Anti-dilution gives earlier investors extra shares, which come out of common. The 409A price drops, so options granted at the old price are underwater: worth nothing until the company is worth more than you'd pay to exercise. And the board may reprice them to the new 409A. Add a down round with repricing on and off to see the difference.

Is an IPO better than an acquisition at the same price?

For common, usually. In an IPO every preferred share converts to common, so liquidation preferences disappear and the market cap is split by share count. In an acquisition, preferences come first. Switch the exit between Acquisition and IPO at the same value to see how much the preferences cost you. Paper Money ignores lockups, the IPO discount, and the stock price after listing, which can matter more.

Should I exercise my options when I leave?

It depends on the price and your taxes. Paper Money shows the cash side: when you leave, your vested options that are worth more than their strike at the current 409A can be bought at their strike, and the rest go back to the pool. It doesn't model the tax on exercise. ISO vs. NSO vs. RSU does, including the AMT trap.

Can it model venture debt, secondary sales or a cap on participation?

Not yet. The timeline has SAFEs, convertible notes, priced rounds (with pool top-ups, preference multiples, participation, seniority, anti-dilution and repricing), option grants, and leaving. Venture debt, secondaries, warrants, pay-to-play, capped participation and acceleration on a sale aren't modeled. If one of those decides your outcome, read the actual documents with a lawyer.

Partly jokes. Not legal, tax or investment advice, and your cap table is not a game, even if this one is.

The terms

Vesting and the cliff
You earn your shares over time, usually four years. Nothing vests until your first anniversary (the cliff); then a year’s worth vests at once, and the rest monthly. Leave early and the company buys back or cancels the unvested part.
Option pool
Shares set aside for future employees. The unallocated part counts in fully diluted ownership, but in a sale it gets nothing: it simply disappears, and everyone else’s slice grows.
Fully diluted
Every share that exists or could: common, preferred as converted, options, the unallocated pool, and SAFEs and notes waiting to convert. It’s the only denominator worth asking about.
83(b) election
A letter to the IRS saying “tax my restricted stock now, at today’s value, not as it vests.” It must be filed within 30 days. At a tenth of a cent per share, the tax is nothing; miss it, and you may owe income tax on every vesting date as the value climbs.
SAFE
Simple Agreement for Future Equity. Money now, shares at the next priced round. Not debt: no interest, no maturity. With a post-money SAFE, amount ÷ cap is the investor’s slice before the round’s new money: $1.5M on a $12M cap is 12.5%.
Valuation cap
The highest valuation at which a SAFE or note converts. If the next round is priced above the cap, early investors convert at the cap’s lower price and get more shares.
Pre- and post-money
Pre-money is what the company is worth before new cash arrives; post-money adds the cash. A new investor owns investment ÷ post-money.
Stock options
The right to buy shares at a fixed strike price. Worth (share value − strike) × shares. You don’t own stock until you exercise, which costs money and can trigger tax.
409A valuation
An independent appraisal of common stock that sets option strike prices. Common prices well below preferred, often a quarter to a third, because preferred has rights common doesn’t.
Preferred stock
What investors buy in a priced round. It can convert to common, but until it does it carries rights: liquidation preference, anti-dilution protection, board seats, vetoes.
Convertible note
A loan that converts into equity at the next round. It accrues interest (which converts into more shares), has a maturity date, and converts at a discount or at a cap, whichever gives the lender more shares.
Discount
Early money converts at, say, 20% below the new round’s price: the reward for investing before anyone set a price.
Priced round
Investors buy newly issued preferred at a set price per share: pre-money valuation ÷ fully diluted pre-money shares, where “pre-money shares” includes converting SAFEs, notes, and the new pool.
Option pool shuffle
Investors ask for the pool top-up to count in the pre-money, so only existing holders are diluted by it. Effective pre-money = headline pre-money − value of the new pool. Compare term sheets on that number.
Liquidation preference
In a sale, preferred gets its money back (1x, or a multiple) before common gets anything. Non-participating preferred must choose: take the preference, or convert to common and share pro rata. It converts once the sale is big enough.
Participating preferred
Takes its preference and then its pro rata share of what’s left, as if it were common too. Founders call it double dipping. Sometimes capped at 2–3x.
Seniority
Which preferred gets paid first. Pari passu classes share pro rata; a senior class is paid in full before junior classes see a dollar.
Anti-dilution
If a later round prices below an investor’s price, their conversion price drops so each preferred share converts into more common. Broad-based weighted average adjusts partway; full ratchet resets all the way, as if they’d invested at the new price. The extra shares come from common.
Headline valuation
Price of the newest preferred share × every share. It prices common as if it had preferred’s rights, so it overstates what common would get in a sale, sometimes by a lot.
Capital stack
The order claims get paid in a sale or shutdown: secured (senior) debt, priority claims like wages and payroll taxes, subordinated (junior) debt and other creditors, preferred stock by seniority, then common. Each layer is paid in full before the next gets anything.
Down round
Raising at a lower price per share than the last round. It triggers anti-dilution, drops the 409A, and often forces option repricing and layoffs.
Structured round
Investors keep the old headline price but add protection: a bigger preference multiple, participation, seniority. It avoids a “down round” on paper while making common worth less in all but huge outcomes.
Option repricing
Lowering underwater options’ strike price to the new 409A. It takes a board vote, and sometimes shareholder approval or a vesting reset.
Exercise window
Leave and you usually have 90 days to buy your vested options or lose them. Exercising costs the strike, and can trigger tax on the spread (income tax for NSOs, possibly AMT for ISOs). Some companies extend the window for years; ask before you join.
Waterfall
The line-by-line split of sale proceeds: fees, debt, payroll, each preferred class, and last, common. Also what an employee should ask to see before counting their options.

How this is calculated

What's modeled

  • The cap table starts with founder shares and an option pool, then replays every event in month order. Edit or switch off any event and everything after it recomputes.
  • SAFEs are post-money: amount ÷ cap is the holder's slice of the company before the next round's new money. Convertible notes accrue simple interest and convert at the cap or the discount, whichever gives the lender more shares.
  • Priced rounds set the price from the pre-money valuation over every share before the new money, including converting SAFEs and notes and the pool top-up, so only earlier holders are diluted by those (the option pool shuffle).
  • Anti-dilution in a round priced below an earlier one: broad-based weighted average or full ratchet, as the earlier class chose. Repricing resets underwater options to the new 409A price.
  • The 409A price of common is 30% of the last preferred price, and before any priced round 10% of the price the latest SAFE cap implies. New options are granted at that strike.
  • Vesting is 4 years, monthly, with a 12-month cliff, for founders and employees alike.
  • A sale pays 2% in fees, then preferred by seniority, then common. Each non-participating class takes its preference or converts to common, whichever pays it more; participating preferred takes both. SAFEs and notes that haven't converted are paid back after every preferred class and before common. Options are exercised only when the sale price per share beats their strike.
  • An IPO converts all preferred to common and splits the market cap by share count.

Simplifications

  • Everything is before tax. ISO vs. NSO vs. RSU shows what each kind of grant leaves you after it.
  • The 409A ratios are typical, not an appraisal; real ones depend on the company's stage, cash and the appraiser.
  • Participation is uncapped. Venture debt, secondary sales, warrants, pay-to-play, dividends, and acceleration on a sale aren't modeled.
  • The exit happens a year after the last event unless you pick a month. Unvested shares at a sale are shown as rolling into the buyer's stock and vesting on, which is common but not guaranteed.
  • An IPO ignores the lockup, the offering itself and what the stock does afterwards.
  • This is a teaching simulator for cap table mechanics, not legal, tax or investment advice.

Sources