Answer
What is a cap table?
Quick answer
A cap table — capitalization table — is the ledger of who owns what in a company: every shareholder, option holder, and convertible instrument, with counts and percentages. It answers the only question that matters in every financing and exit — who gets how much — so keeping it accurate is a founding obligation.
Updated August 2026. Evergreen page — refreshed in place as facts change.
Every financing, hire with equity, and exit negotiation runs through the cap table. Founders who keep it clean move fast at every one of those moments; founders who don't discover their true ownership in a diligence spreadsheet someone else built.
What's actually on it
Rows are holders; columns are instruments: common stock (founders, employees), preferred stock by round (investors, with their rights), options and RSUs under the equity plan, warrants, and convertibles — SAFEs and notes — waiting to become shares. Each row carries counts, and from counts, percentages.
The percentage that matters is fully diluted: ownership calculated as if every option (granted and reserved), warrant, and convertible had converted. Basic ownership — issued shares only — flatters everyone; term sheets, acquirers, and sophisticated hires all think fully diluted.
Dilution, demystified
Dilution is simple arithmetic wearing a scary name: new shares are issued, the denominator grows, existing percentages shrink. Founders holding 80% who sell 20% of the post-money in a round hold 64% after — smaller slice, ideally of a much bigger pie.
The subtler dilutions are the ones founders don't model: option-pool expansions demanded inside the pre-money (existing holders absorb it), and stacked post-money SAFEs that each lock a fixed percentage before any priced round arrives. A cap table without a SAFE-conversion model is a surprise on a timer.
Keeping it clean
Three habits separate clean tables from forensic projects. Every grant papered when made — board consents, signed agreements, 409A-priced options, filings on time. One source of truth — dedicated cap-table software once you have investors, not a drawer of PDFs and a spreadsheet with versions. And a standing pro-forma model — what the table looks like after the SAFEs convert and the next pool expansion — so no financing term ever surprises you.
- Paper every grant when it happens, not at the next round
- Maintain one authoritative table, in real software
- Model SAFE conversions and pool expansions continuously
- Reconcile against legal records before every financing
Where token ownership fits
Crypto startups often run a second ledger beside the cap table: token allocations, promised via token warrants or side letters, tracking who has rights to a future token distribution. The discipline is identical — record grants when made, model total allocation, one source of truth — and the failure mode is identical too: promises in Slack that surface during diligence. If your company has any token plans, version the token table with the cap table from day one.
Frequently Asked Questions
What does 'fully diluted' actually include?
All issued shares plus everything convertible into shares: granted and reserved options, warrants, and converting SAFEs/notes. It's the denominator investors and acquirers use for every real ownership number.
How much of a company do employees typically hold?
Option pools commonly run 10–20% of fully diluted ownership across a company's early life, refreshed at financings. The right size is what your hiring plan needs — pools are dilution, so demand-driven beats round numbers.
When should we move off the spreadsheet?
At the first outside investment. Software-maintained tables (with issuances tied to signed documents) prevent the version-drift that turns diligence into archaeology.
Who sees the cap table?
The board and major investors see it regularly; prospective investors see it in diligence; employees typically see their own grant plus the fully diluted share count needed to value it — company norms vary beyond that.
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Important Disclosures
- Company, fund, and accelerator names are referenced for identification and education only; no affiliation, sponsorship, or endorsement is implied. All trademarks belong to their owners.
- Figures describing third-party firms and market norms are widely reported values as of the years cited and may have changed. Verify current details with primary sources.
- Information on this page is general and educational — it is not investment, legal, or tax advice, and it is not an offer of securities.
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