Cap Table

What is Cap Table?

A cap table (short for capitalization table) is a ledger that tracks ownership in your company. It lists every shareholder — founders, investors, employees with stock options — along with the type of shares they hold, the number of shares, and the percentage of the company they represent.

The cap table evolves with every fundraise, option grant, and equity event. After a seed round, it might show two founders with 80% and seed investors with 20%. After Series A with an expanded option pool, those percentages shift.

Maintaining an accurate cap table is critical for fundraising (investors need to see the current ownership structure), hiring (candidates want to understand the value of their equity offer), and eventual exit (the cap table determines who gets paid and how much).

Why it matters

Cap table mistakes are expensive and hard to fix. An incorrectly maintained cap table can derail fundraising rounds, create legal disputes, and cost thousands in legal fees to correct.

For founders, the cap table is a constant reminder of dilution. After each round, your ownership percentage decreases. Understanding the cap table helps you make informed decisions about how much to raise, what valuation to accept, and how large an option pool to create.

Formula

Ownership % = Shares Owned / Total Shares Outstanding
Post-Round Ownership = Pre-Round Shares / (Pre-Round Shares + New Shares Issued)

Example

Common mistakes

• 1Not keeping the cap table updated after every equity event (option grants, SAFEs converting, etc.)
• 2Not understanding the difference between fully diluted and outstanding shares when calculating ownership
• 3Managing the cap table in a spreadsheet that gets out of sync with legal documents