Biggest omission is the option pool. The option pool is expressed as a percentage of the post money shares, and can range from 20-40%. A 30% option pool would

Biggest omission is the option pool. The option pool is expressed as a percentage of the post money shares, and can range from 20-40%. A 30% option pool would make the founders stake 50% after the hypothetical series A, not 80%. Not to mention any seed investors, whose stake would also be deducted from the hypothetical founders stake in the series A. And by the time of a Series F', there has usually been additional dilution from expansion of the options pool, warrants issued for venture debt, etc. If you're wondering, why is the options pool included in the pre-money valuation, when those shares haven't even been issued yet? VCs probably started this practice to make their offer seem more impressive. I'd love to hear any other explanations, it's a curious phenomenon. EDIT: While its true that option pools have gotten smaller recently, that does mean the pool needs to get expanded again more and sooner, certainly by a series F'.