What is a cap table? Definition, example and how to read one

Capable TeamSeptember 16, 20263 min read

The short answer

A cap table (capitalization table) is the record of who owns a company: every share, option, SAFE, note and warrant, who holds it, and on what terms. Its most important number is fully diluted ownership, which counts every share that exists or could exist from options, the unissued option pool and convertible securities. Investors, lawyers, auditors and acquirers all rely on it, so it has to match the signed documents exactly.

A cap table is the single document that says who owns your company. Every financing, grant, exercise and acquisition depends on it being right.

This guide explains what goes in a cap table, how to read the fully diluted column, and a worked example you can follow.

A cap table is the ledger of who owns the company

"Cap table" is short for capitalization table. It lists every security a company has issued or promised, and who holds it.

A cap table records every share, option, SAFE, note and warrant, who holds each one, and on what terms.

A complete cap table includes:

Stakeholders: founders, employees, advisors, investors and entities.
Share classes: common stock and each series of preferred, with authorized shares and rights.
Issued shares: certificate or ID, holder, class, quantity, price and date.
Equity awards: options, RSUs and RSAs, with vesting schedules and exercise prices.
Convertible securities: SAFEs and notes, with valuation caps, discounts and interest.
Warrants.
The option pool: the shares reserved for future grants.

Fully diluted ownership is the number investors care about

There are two common ways to count ownership.

Outstanding (basic) ownership counts only shares that have actually been issued. Fully diluted ownership also counts every share that could be issued.

Fully diluted usually includes:

All issued common and preferred shares.
All outstanding options, RSUs and warrants, vested or not.
The unissued remainder of the option pool.
Shares expected from converting SAFEs and notes, when terms allow an estimate.

Investors price rounds on fully diluted shares, so your fully diluted percentage is the ownership figure that matters in a negotiation.

A worked example: a seed-stage company

Here is a simple company after a seed round.

Stakeholder	Security	Shares	Fully diluted %
Founder A	Common	4,000,000	40.0%
Founder B	Common	3,000,000	30.0%
Seed investors	Series Seed Preferred	1,500,000	15.0%
Employees	Options granted	600,000	6.0%
Option pool	Unissued	900,000	9.0%
Total		10,000,000	100.0%

On an outstanding basis, only 8,500,000 shares exist. Founder A owns 47.1% of those, but 40.0% fully diluted.

If the company grants 100,000 more options from the pool, nobody's fully diluted percentage changes. The shares move from "unissued pool" to "options granted."

Every financing changes the cap table in the same three ways

New shares are issued

A priced round creates a new series of preferred stock. Everyone else's percentage goes down.

Convertible securities convert

SAFEs and notes turn into preferred shares at the cap or discount price. See SAFE vs convertible note for how conversion works.

The option pool is often resized

Investors frequently ask for a larger pool before the round closes. When that happens in the pre-money, the existing holders absorb the dilution. Read how to size an option pool.

Spreadsheets break at the first real round

A spreadsheet is fine at incorporation. It starts to fail when:

Vesting has to be computed as of a specific date.
Options are exercised, cancelled or returned to the pool.
SAFEs with different caps need to convert at once.
Someone asks what the cap table looked like on a past date.
Counsel's documents and the spreadsheet disagree.

Move your cap table to software before your first priced round; lawyers and investors will reconcile it against your documents during diligence.

Capable keeps the cap table matched to the documents

Capable records every security as a transaction with a date, an actor and a reason. It computes fully diluted ownership and vesting as of any date.

Every security type, including ISO and NSO options with the $100,000 split.
Share classes with liquidation preference, participation and conversion terms.
Round modeling and exit waterfalls.
Excel and Open Cap Table Format export at any time.
Unlimited stakeholders on both plans: Startup at $1,200 a year and Growth at $3,500 a year.

Frequently asked questions

What is a cap table?+

A capitalization table is a ledger of a company's ownership. It lists every security the company has issued or reserved, who holds it, the share class, the price paid, and vesting or conversion terms.

What does fully diluted mean?+

Fully diluted ownership counts all issued shares plus every share that could be issued: outstanding options and RSUs, the unissued option pool, warrants, and usually shares from converting SAFEs and notes. Investors almost always negotiate on a fully diluted basis.

Who maintains the cap table?+

The company does, usually the CEO or finance lead with outside counsel. Software keeps it in sync with signed documents, vesting and transactions.

Can I keep my cap table in a spreadsheet?+

At formation, yes. Once you have an option pool, SAFEs and employees vesting, spreadsheets tend to drift from the legal documents. Most companies move to software before their first priced round.

How do I share my cap table with investors?+

Export it to Excel as of a specific date, or give investors and counsel read-only access. Capable also exports the Open Cap Table Format, a standard JSON format other systems can read.