Cap table
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A spreadsheet or tool that tracks who owns what percentage of a company, including founders, investors, and employees with stock options.
A cap table (capitalization table) is the record of who owns what in your company. It lists every shareholder, their share count, their ownership percentage, and the terms of their shares (common stock, preferred stock, options, warrants, SAFEs).
The cap table starts simple (two founders, 50/50) and gets complex fast. Add a seed round, an option pool, employee grants, a Series A with preferred shares and anti-dilution provisions, and suddenly the cap table is a spreadsheet that only a lawyer can fully interpret.
A clean cap table matters for fundraising, hiring, and exits. Investors review the cap table before writing a check. Messy cap tables (unclear ownership, too many small investors, overly complex terms) are red flags. Tools like Carta and Pulley help manage cap table complexity. Every equity grant, stock option, and SAFE conversion flows through the cap table.
Examples
A startup sets up its initial cap table.
Two founders incorporate with 10M authorized shares. Founder A gets 5M shares (50%). Founder B gets 5M shares (50%). Both are subject to 4-year vesting with a 1-year cliff. The cap table is simple: two lines.
The cap table grows after a seed round.
Post-seed: Founder A (40%), Founder B (40%), Option pool (10%), Seed investors (10%). The cap table now includes 5 SAFE notes from angels and a venture fund. Each converts at different valuation caps.
A potential acquirer reviews the cap table.
During due diligence, the acquirer's lawyers examine every line of the cap table. They verify that all shares are properly documented, all option grants have board approval, and all investors have signed their paperwork. One unsigned document delays the deal by two weeks.
Frequently asked questions
What tool should startups use for cap table management?
Carta is the most popular. Pulley and AngelList Stack are alternatives. A spreadsheet works for the earliest stage, but switch to a dedicated tool before your first priced round. Cap table errors are expensive and embarrassing to fix later.
Who should have access to the cap table?
The founders, the CFO or finance lead, the company's lawyer, and board members. Individual employees should know their own grant details but not the full cap table. Investors can see the cap table as part of their information rights.
Related terms
The reduction in ownership percentage that existing shareholders experience when new shares are issued in a funding round.
Ownership in a company represented by shares of stock, which entitle the holder to a proportional share of the company's value.
The process by which an employee earns their equity over time, typically over four years with a one-year cliff.
The right to purchase company shares at a fixed price (the strike price), typically granted to employees as part of compensation.
A non-binding document outlining the key terms of an investment, including valuation, board seats, and investor rights.
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