A cap table (short for capitalization table) is the record of ownership in a company. It lists every shareholder and security holder, what they hold, and the percentage of the company each stake represents on a fully diluted basis. If someone asks “who owns this business, and how much?”, the cap table is the answer.
Early on, that answer is simple — two founders splitting equity. It gets complicated fast: an option pool for employees, a few SAFEs from angels, a priced round with preferred stock, maybe a convertible note. Each of these is a different kind of claim on the company, and the cap table is where they all reconcile.
What goes on a cap table
A complete cap table accounts for every security class:
- Common stock — typically held by founders and employees.
- Preferred stock — issued to investors in priced rounds, usually with extra rights such as a liquidation preference.
- The option pool — shares reserved for employee equity grants, whether or not they’ve been granted yet.
- SAFEs and convertible notes — investments that convert into equity later, at a priced round.
- Warrants — the right to buy shares at a set price, sometimes issued to lenders or partners.
Authorized, issued, and fully diluted
Three numbers trip people up, and keeping them straight is most of what a cap table does:
- Authorized shares — the maximum the company is legally allowed to issue, set in its charter.
- Issued (or outstanding) shares — what has actually been handed out so far.
- Fully diluted shares — everything that could exist if every option were granted and exercised and every SAFE and note converted. This is the number that matters for ownership percentages, because it reflects the company you’ll actually have after the dust settles.
When founders are surprised by their ownership after a round, it’s almost always because they were looking at issued shares instead of the fully diluted picture.
Why the cap table matters
It’s not just bookkeeping. The cap table drives real decisions:
- Fundraising — investors model their ownership and your dilution directly from it.
- Hiring — every option grant has to come from the pool and be tracked.
- Diligence and exits — an acquirer or lead investor will scrutinize it line by line, and discrepancies cost time and trust.
When a spreadsheet stops working
A spreadsheet is fine for two founders. It starts to fail the moment ownership gets non-trivial — a pool, a few SAFEs, a priced round. Formulas drift, versions multiply, and the percentages quietly stop tying to the dollars. The problem is invisible until diligence forces a reconciliation, and by then it’s expensive. That’s the point at which a purpose-built cap table platform earns its place: it keeps one reconciled ledger that’s accurate to the cent and ready to share.