What is a Cap Table?
A cap table (capitalization table) is the definitive record of who owns your company. Every share of stock, every option grant, every convertible note, every SAFE. It shows ownership percentages, share classes, and how the pie splits if you raise, exit, or liquidate.
Why Your Cap Table Matters
A messy cap table kills deals. Investors want clarity on ownership before writing checks. If you can't produce a clean cap table in 24 hours, it signals operational sloppiness.
Cap tables also drive critical decisions:
- How much dilution a new round creates
- What employees actually own after all preferences
- Who has blocking rights or pro-rata
- What everyone gets in an exit scenario
Cap Table Mistakes to Avoid
Don't manage your cap table in a basic spreadsheet past seed stage. Common mistakes:
- Forgetting to account for the option pool in dilution math
- Not tracking convertible instruments (SAFEs, notes) properly
- Losing track of exercised vs. unexercised options
- Ignoring vesting schedules on founder shares
Formula
Ownership % = Shares Held / Total Shares Outstanding (fully diluted)
Fully diluted means counting all shares that could exist: common, preferred, options (vested and unvested), warrants, and converted SAFEs/notes.
Example
Simple post-seed cap table:
- Founder A: 3,000,000 shares (30.0%)
- Founder B: 3,000,000 shares (30.0%)
- Seed Investor: 2,000,000 preferred shares (20.0%)
- Option Pool: 1,500,000 shares reserved (15.0%)
- Angel (SAFE converted): 500,000 shares (5.0%)
- Total fully diluted: 10,000,000 shares (100%)
After a Series A issuing 2,500,000 new shares, everyone's percentage shrinks proportionally. The option pool may also expand, further diluting existing holders.