Startup Guide

The company clock

Day zero to Series B

An illustrative timeline of a venture-backed software company: what happens at each milestone, what the company is worth, and what the founders still own afterwards. The numbers are a representative example, not a promise — real outcomes vary widely by sector, geography, and market cycle.

Founder ownership over time

Combined founder equity falls from 100% at incorporation to roughly 37% after Series B — while the value of that smaller slice grows from nothing to about $66M on paper.

The whole cap table

Every round adds a new band. Each new investor typically buys 20% of the company, and the option pool is refreshed from the pre-money — which is why founders dilute faster than the headline round size suggests.

  • Founders
  • Option pool
  • Angels / pre-seed
  • Seed
  • Series A
  • Series B

Milestone by milestone

  1. Day 0 · Formation

    The idea

    Two founders sketch the problem on a whiteboard. There is no company, no code, no cap table — only a hypothesis and a customer worth calling.

    Example valuation
    No valuation yet
    Capital raised
    —
    Founders hold
    100.0%
    Option pool
    0.0%
    • Founders agree on the problem, not the product. The first month is customer discovery: 30–50 conversations with the people who feel the pain.
    • Equity is a conversation, not a document. Split discussions start now and should reflect the next four years of work, not the last four weeks.
    • There is no valuation because there is no entity and no priced instrument.

  2. Month 1 · Formation

    Incorporation

    A Delaware C-corp is formed, 10,000,000 shares are authorized, and founder stock is issued at par with four-year vesting and a one-year cliff.

    Example valuation
    $0.0001 / share (par)
    Capital raised
    —
    Founders hold
    100.0%
    Option pool
    0.0%
    • Founders buy restricted stock for a nominal amount and file an 83(b) election within 30 days — the single most expensive deadline a founder can miss.
    • IP assignment agreements move any prior work into the company. Investors will diligence this at Series A.
    • Standard vesting: 4 years, 1-year cliff, monthly thereafter, with double-trigger acceleration on change of control.

  3. Month 6 · Pre-seed

    Pre-seed / angels

    Angels and a pre-seed fund write the first checks on post-money SAFEs. A 10% option pool is created to hire the first three engineers.

    Example valuation
    $5M post-money cap
    Capital raised
    $500K on SAFEs
    Founders hold
    80.0%
    Option pool
    10.0%
    • Instrument: post-money SAFE with a $5M cap. $500K buys roughly 10% once converted.
    • A 10% employee option pool is authorized so early hires get 0.5%–2.0% grants.
    • Milestone the money buys: a working product and 10 design partners inside 9 months.

  4. Month 14 · Seed

    Seed round

    A seed fund leads a priced round at $15M post. The SAFEs convert, the pool is topped up, and the first real board seat appears.

    Example valuation
    $15M post-money
    Capital raised
    $3M priced equity
    Founders hold
    62.4%
    Option pool
    9.8%
    • $3M for 20% of the company. The pre-seed SAFEs convert at their $5M cap, so early angels see a 3x markup on paper.
    • Option pool topped up by ~2 points net, taken from the pre-money — founders absorb that dilution.
    • Board: 2 founders, 1 investor. Monthly investor updates begin; ARR, burn, and runway become the shared language.
    • Target for the next round: $1M–$2M ARR growing 3x year over year.

  5. Month 26 · Series A

    Series A

    Product-market fit is legible in the data. A Series A lead buys 20% at $60M post, and the company hires its first true executives.

    Example valuation
    $60M post-money
    Capital raised
    $12M
    Founders hold
    48.1%
    Option pool
    10.5%
    • $12M at $48M pre / $60M post. Roughly 4x the seed valuation on ~$1.5M ARR — a 40x multiple the company must grow into.
    • Pool refresh of ~3 points funds the first VP and C-level hires: a CTO or VP Engineering, a CFO or finance lead, a head of sales.
    • Board becomes 2 founders, 2 investors, 1 independent. Quarterly board decks, an audited-ready close, and a real data room follow.
    • The CFO's job starts here: ARR bridge, cohort retention, CAC payback, and an 18–24 month plan to Series B metrics.

  6. Month 44 · Series B

    Series B

    The round is about scale, not proof. Growth investors underwrite the sales machine, and the founders drop below half the company.

    Example valuation
    $175M post-money
    Capital raised
    $35M
    Founders hold
    37.5%
    Option pool
    10.2%
    • $35M at $140M pre / $175M post on roughly $8M–$10M ARR — a 17x–22x forward revenue multiple.
    • Another ~2 point pool refresh supports a full executive bench: COO, CMO, CPO, CHRO.
    • Diligence deepens: audited financials, revenue recognition under ASC 606, security review, and reference calls with 15+ customers.
    • Founders now hold roughly 37% between them — control comes from board composition and performance, not the share count.

Illustrative figures for education only — not investment, legal, or tax advice.