Blog: VLP Speaks

Capitalization Tables and SAFEs: Making Sure You Understand Your Cap Table – A Blog Post by David Goldenberg

Posted on Oct 30, 2025 in New and Emerging Companies, Blog by David Goldenberg

If you are a startup or company that has not been able to survive on cash flow the last few years, post-money SAFEs and extension rounds have likely helped you survive.  However, these stop-gap methods do create issues of their own and can create real cap table headaches. Here’s how to clean things up. 

The Post-Money Cap Table Mess

Over the last few years, startups have leaned heavily on post-money SAFEs and “extension rounds” to stay afloat. These tools offered fast, founder-friendly capital without the complexity of a newly priced round. But this can create a ‘hangover’: confusing ownership math, overlapping securities, and a cap table that’s tough to explain. Along with diligence challenges.

Now that more companies are raising priced rounds, preparing for M&A, or trying to onboard a CFO, your company may be faced with having to explain its cap table or model different scenarios.  If your company has raised multiple SAFEs (especially with different terms), issued a bunch of advisor equity, or extended a prior round without clean documentation, it may be time to get proactive.

Post-money SAFEs aren’t always “simple.”

Y Combinator’s post-money SAFE popularized a clearer equity impact—on paper. But multiple SAFEs with different valuation caps, MFNs, or discounts create a complex set of facts that likely requires detailed modeling. When you have layered SAFEs plus convertible notes or extension rounds, you may end up with a surprising (and founder-dilutive) ownership picture.

Over-subscription can create silent dilution.

Many startups reopened their last priced round (an “extension”) and added significant capital without adjusting the price. On a fully diluted basis, this can increase the post-money valuation and dilute earlier holders, including founders and employees, more than expected—especially if equity awards weren’t refreshed.

Most startups don’t track the waterfall correctly.

For companies that have relied heavily on SAFEs, Investors often ask, “What’s my ownership after conversion?” Founders respond with best guesses. But each SAFE or note might convert at a different price, and many founders skip the hard part: creating a pro forma cap table that models conversion accurately. This can be a red flag in diligence and a potential source of conflict during exits.

Equity summaries are often outdated or misleading.

Cap tables built in Excel or pulled from Carta snapshots frequently omit unconverted SAFEs, include inconsistent assumptions, or double-count option pools. If your company is doing board refreshes, planning a next round, or eyeing a strategic sale, invest the time now to reconcile your data.

You can clean it up—but don’t wait.

This isn’t just about housekeeping. A messy cap table can delay funding, derail M&A, or undermine trust with investors and employees. Founders should work with counsel to:

• Inventory all convertible instruments and their terms
• Build conversion models under plausible scenarios
• Reconcile equity awards and option pool usage
• Prepare a clean “as-converted” capitalization table and summary

Investors should ask companies for an updated capitalization table, including all recent SAFEs, to better understand their ownership position.

Bottom line:

If your company raised multiple SAFEs or did an extension round, your ownership structure is likely more complex than you think. Don’t wait for your next investor to spot the problem. Clean up the cap table now—and be ready to move quickly and negotiate with confidence if an opportunity arises.