Cap Table

A capitalization table — cap table for short — is the definitive record of your company's ownership structure. It lists every shareholder, the type of securities they hold (common stock, preferred stock, options, warrants, SAFEs, convertible notes), and the percentage of the company each person or entity owns. At its simplest, a two-founder startup's cap table might just be two lines: Alice, 500K shares, 50%; Bob, 500K shares, 50%.

As you raise money and hire employees, your cap table gets progressively more complex. After a seed round, it might include founders, three angel investors with SAFEs at different valuation caps, and a 10% unallocated option pool. After Series A, add a lead VC with preferred shares, their pro rata rights, and employees with vesting schedules at various stages. By Series B, you might have dozens of line items with different share classes, preferences, and conversion terms.

Most startups manage their cap table with software like Carta, Pulley, or AngelList Stack. The cap table needs to be updated with every equity event: new hires receiving options, SAFEs converting, rounds closing, employees exercising options, or shareholders selling secondary shares. An out-of-date or inaccurate cap table is a red flag for investors during due diligence and can delay or even kill a fundraise.

Your cap table is the single source of truth for who owns your company. Investors will scrutinize it during due diligence, potential acquirers will analyze it before making an offer, and your co-founder will (rightly) care about it deeply. A messy cap table signals a messy operation. More practically, you need an accurate cap table to calculate dilution from a new round, determine how much of the option pool is available for new hires, and understand what everyone walks away with in an exit scenario.