Cap Table Management

Equity Dilution Advisory

Cap table modeling, ESOP structuring, CCPS/CCD issuance, and anti-dilution protection — ensuring you retain control while raising capital efficiently.

⏱ 3–8 Weeks 📋 8+ Deliverables 🌍 India

What is Equity Dilution Advisory?

Every funding round dilutes the founders' stake. Without careful modeling, founders can lose control, trigger anti-dilution clauses, or create misaligned incentive structures. Equity dilution advisory ensures optimal cap table management through every funding stage.

Why It Matters

A poorly structured funding round can leave founders with less than 20% equity by Series C, destroy employee morale through ESOP dilution, or create complex liquidation preferences that wipe out common shareholders on exit.

SilverSiX models every scenario — from seed to IPO — ensuring you understand the impact of each term sheet clause before you sign.

📊 Cap Table Essentials

  • Founder equity tracking
  • Investor class rights (Series A/B/C)
  • ESOP pool sizing & refresh
  • Convertible instruments (CCPS, CCD, SAFE)
  • Liquidation preference waterfall
  • Anti-dilution mechanisms

Comprehensive Dilution Services

📈 Cap Table Modeling

Dynamic cap table modeling across multiple funding scenarios, exit valuations, and instrument types.

  • Pre-money vs. post-money valuation
  • Round-by-round dilution tracking
  • IPO / M&A exit waterfall
  • Reverse split & recapitalization

🎁 ESOP Structuring

Design and implementation of employee stock option plans that attract talent without excessive founder dilution.

  • ESOP pool sizing (10-15% standard)
  • Grant, vesting & exercise mechanics
  • ESOP trust / ESOP direct route
  • Tax-efficient ESOP design (Section 17(2))

🔄 Instrument Structuring

Selection and design of optimal securities for each funding round — equity, CCPS, CCD, or convertible notes.

  • CCPS (participating / non-participating)
  • CCD (convertible after a period)
  • SAFE notes (for early rounds)
  • Bridge round instruments

🛡️ Anti-Dilution

Structuring anti-dilution protections that balance investor security with founder equity preservation.

  • Full ratchet vs. weighted average
  • Pay-to-play provisions
  • Pre-emptive rights (ROFR)
  • Pro-rata participation rights

💧 Liquidation Preference

Designing exit waterfalls that protect investor downside while preserving founder upside.

  • 1x non-participating (founder-friendly)
  • 1x participating (investor-friendly)
  • 2x+ liquidation multiples
  • Conversion mechanics on exit

⚖️ Term Sheet Negotiation

Advisory on term sheet clauses from a founder-control and dilution-minimization perspective.

  • Board composition & control
  • Protective provisions & veto rights
  • Drag-along & tag-along rights
  • Information & inspection rights

Our Dilution Advisory Process

1

Cap Table Audit

Comprehensive review of existing cap table, shareholder agreements, and instrument terms.

2

Scenario Modeling

Building round-by-round dilution models for seed, Series A, B, C, and exit scenarios.

3

Term Sheet Review

Clause-by-clause analysis of investor term sheets with dilution impact quantification.

4

Instrument Design

Recommending optimal securities and structuring terms to minimize founder dilution.

5

Documentation

SHA, SPA, and ESOP plan drafting with regulatory compliance (Companies Act, FEMA, SEBI).

6

Ongoing Monitoring

Cap table updates, ESOP grant tracking, and pre-funding dilution checks.

What You Receive

DeliverableDescriptionTimeline
Cap Table ModelExcel model with all scenarios & waterfallsWeek 1
Dilution Impact NoteFounder stake % across rounds & exitWeek 2
Term Sheet ReviewRed-line comments with dilution quantificationWeek 2
Instrument MemoCCPS vs. CCD vs. equity recommendationWeek 3
ESOP Plan DraftCompanies Act compliant ESOP schemeWeek 3
SHA Compliance NoteFEMA + SEBI compliance check on draft SHAWeek 4
Liquidation WaterfallExit proceeds distribution by classWeek 4
Board PresentationInvestor-ready cap table & dilution summaryWeek 5

Common Questions

What is the difference between pre-money and post-money valuation?
Pre-money valuation is the company's value before the investment. Post-money = pre-money + investment amount. Investors typically quote post-money valuations, which can be misleading if not modeled correctly.
What is a full ratchet anti-dilution?
Full ratchet gives the investor the right to convert their existing shares at the new, lower price in a down round. This is extremely dilutive for founders and should be avoided or negotiated to weighted average.
How much ESOP pool should I create?
Typically 10-15% for early-stage companies, with refresher grants at Series B/C. The pool size should be based on hiring plan, market benchmarks, and founder dilution tolerance.
What is a liquidation preference?
Liquidation preference determines who gets paid first on exit. A 1x non-participating preference means the investor gets their money back first, then converts to common for upside. Participating preference allows double-dipping.
Can I issue shares at different prices to different investors?
Yes, but different classes (CCPS, CCD) can have different rights and prices. However, issuing the same class at different prices to related parties can trigger Section 56(2)(viib) (angel tax) scrutiny.

Ready to Structure Your Cap Table?

Book a confidential discovery call with our advisory team. We assess your situation and outline a clear execution roadmap within 48 hours.

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