You own 100% of your company on day one. After a seed round, you're at 80%. Add a stock option pool and you drop to 72%. When your SAFEs convert at Series A, you might be looking at 55%.

That's share dilution — your ownership shrinks every time new shares enter the cap table. It happens during priced rounds, option pool expansions, and SAFE or note conversions.

Dilution isn't inherently bad. A smaller slice of a larger pie can be worth more. The problem is when founders don't model it before signing terms. Two SAFEs with low valuation caps (i.e. the price at which early investments convert to equity) can compound into far more dilution than expected.

The best defence: build a before-and-after cap table before every raise. Size your option pool to a real hiring plan, not investor defaults. And raise only what you need to reach the next milestone — early rounds cost the most in equity terms.

Decagon, a three-year-old AI customer support startup, completed its first employee tender offer at a $4.5B valuation this week. Over 300 employees can now sell a portion of vested shares to the same investors — Coatue, a16z, Index — that led its $250M Series D just two months ago.

This follows a pattern. Clay, ElevenLabs, and Linear have all run employee tenders recently, with the same playbook: investors buy secondary shares to increase ownership, employees convert paper equity into cash, and the company stays private longer without losing talent to Big Tech.

If you offer equity as compensation, this matters. Tender offers are becoming a retention tool, not just a liquidity event.

The question for your cap table: do your transfer restrictions and equity agreements support secondary sales when the time comes?

Sources: Decagon (LinkedIn) | TechCrunch