What is a Capitalization Table?
A capitalization table (cap table) is a spreadsheet showing who owns what percentage of your company. It lists all shareholders, their share counts, ownership percentages, and the terms of their securities.
Cap tables start simple with just founders. As you raise money, grant options, and issue SAFEs or notes, they become increasingly complex.
Why Cap Tables Matter
Your cap table determines who gets paid in an exit and in what order. Liquidation preferences, participation rights, and conversion terms all affect the waterfall of proceeds.
Investors scrutinize cap tables before investing. They want to understand existing obligations, founder ownership, and whether the structure is clean or complicated.
Cap Table Best Practices
Keep it clean and updated. Use cap table software (Carta, Pulley, AngelList) rather than spreadsheets. Understand fully diluted ownership. Model future rounds to see how your percentage changes.
Ownership % = Shares Owned ÷ Total Shares Outstanding
Fully Diluted Shares = Outstanding + Options + Warrants + Convertibles
Post-Series A cap table:
- Founders: 6,000,000 shares (60%)
- Series A Investors: 2,500,000 shares (25%)
- Option Pool: 1,000,000 shares (10%)
- Angel Investors: 500,000 shares (5%)
Total: 10,000,000 shares (100%)
Fully diluted includes unexercised options in the pool.