Glossary
What Is a Cap Table?
Updated · Team Fonda
Short answer
A cap table, short for capitalization table, is a list of everyone who owns part of a company and how much each one owns. It shows founders, investors and employees, the number of shares each holds and their percentage of the total.
Key takeaways
- Ownership % = shares held / total shares, counted on a fully diluted basis.
- Fully diluted means you count every share that exists or could exist, including the employee option pool.
- The cap table changes whenever you issue shares, grant options or raise money.
- Start it the day you form the company and keep one agreed version.
What a cap table means in plain words
A company is divided into shares. Whoever holds the shares owns the company. The cap table is the record of that: one row per owner, with the number of shares and the percentage.
At the start it can be a spreadsheet with two rows, you and your co-founder. Over time it grows to include an option pool for employees, angel investors and funds.
What goes in a cap table and how to calculate ownership
- Shareholders: founders, investors, employees with shares.
- Type of security: common shares, preferred shares, options.
- Number of shares each holder has.
- Option pool: shares set aside for future employees, whether granted yet or not.
- Convertibles: any SAFE or convertible note that will turn into shares later. List these separately until they convert.
Formula
Ownership % = shares held / fully diluted shares. New shares issued in a round = amount raised / price per share. Price per share = pre-money valuation / fully diluted shares before the round.
A worked example before and after a funding round
This is an illustration with made-up numbers. Say two founders hold 4,000,000 shares each and set aside 1,000,000 shares as an option pool.
| Holder | Shares | Ownership |
|---|---|---|
| Founder A | 4,000,000 | 44.4% |
| Founder B | 4,000,000 | 44.4% |
| Option pool | 1,000,000 | 11.1% |
| Total | 9,000,000 | 100% |
Example only, before the round. Percentages are rounded.
An investor then puts in $500,000 at a $4,500,000 pre-money valuation. Price per share is $4,500,000 / 9,000,000 = $0.50. The investor receives $500,000 / $0.50 = 1,000,000 new shares.
| Holder | Shares | Ownership |
|---|---|---|
| Founder A | 4,000,000 | 40% |
| Founder B | 4,000,000 | 40% |
| Option pool | 1,000,000 | 10% |
| Investor | 1,000,000 | 10% |
| Total | 10,000,000 | 100% |
Example only, after the round. Post-money valuation is $5,000,000.
No founder sold a share, yet each went from 44.4% to 40%. That is equity dilution. You can model your own round in the equity dilution calculator.
Why it matters for a first-time founder
You first meet the cap table when you form the company, well before any investor. The first entries are the split between you and your co-founder, a decision that is hard to change later. The co-founder equity split calculator gives you a starting point for that talk, and the guide on how to find a co-founder covers what to agree before you sign.
Later, every investor will ask for the cap table early in their checks. A clean one speeds up a deal. It also answers your own questions: what a new round would cost you, and what you would receive if the company were sold.
Common mistakes
- Leaving out the option pool or SAFEs. Your share looks larger than it is until they convert.
- Promising equity in conversation. A percentage offered over coffee to an adviser or early helper becomes a dispute later. Write it down and add it to the table.
- No vesting for founders. If a co-founder leaves after three months with all their shares, the cap table is stuck. See vesting and the vesting schedule calculator.
- Several versions of the spreadsheet. Keep one file that everyone agrees is correct, and make sure it matches the signed legal documents.
- Guessing at the legal side. Share classes and company law differ by country. Have a lawyer or accountant confirm the table matches the official records.
Related terms
- Pre-money vs post-money valuation: the two numbers that set the price per share in a round.
- Term sheet: the document that sets the terms of a round, which then change the cap table.
- Seed funding: often the first priced round to add investors to the table.
Frequently asked questions
Do I need a cap table if I have no investors?
Yes, if the company has more than one owner or you plan to give anyone shares or options. With a single owner and no such plans, the table has one row, but it is still worth starting so it is ready when things change.
What does fully diluted mean?
It means counting all shares that exist plus all shares that could be created from options, the unallocated option pool and convertibles. Investors use this number, so your ownership percentage on a fully diluted basis is the one that counts.
Can I keep a cap table in a spreadsheet?
At the start, yes. A simple spreadsheet works for a few holders. Once you have several investors, option grants and convertibles, many companies move to dedicated cap table software or ask their lawyer to maintain it.
Who gets to see the cap table?
The founders, the board, the company's lawyers and accountants, and investors during their checks. Employees with options are usually told their own grant and sometimes the total share count, but practice varies by company and country.