What is Cap Table (Capitalization Table)?
A capitalization table is a spreadsheet or database that shows the ownership structure of a company: who owns what percentage, how many shares, what type (common, preferred), and the resulting dilution from each funding round.
A capitalization table is a spreadsheet or database that shows the ownership structure of a company: who owns what percentage, how many shares, what type (common, preferred), and the resulting dilution from each funding round.
Cap table components: founders' shares (common stock), employee option pool (typically 10-20% reserved), investor shares (preferred stock with special rights), convertible notes/SAFEs (convert to equity on trigger events), and warrants.
Key cap table concepts: fully diluted ownership (including all options, warrants, and convertibles), liquidation preferences (preferred shareholders get paid first in an exit), anti-dilution provisions (protect early investors from down rounds), and option pool shuffle (pre-money vs. post-money pool creation).
Cap table management tools: Carta, Pulley, and Shareworks automate cap table tracking, option grant management, and 409A valuations.
Why It Matters
The cap table determines who benefits from a company's success. Founder-unfriendly terms in early rounds can mean founders own <10% by Series B, destroying their motivation and economic upside.
Frequently Asked Questions
What is a cap table?
A record of a company ownership structure: who owns what shares, what type, and the resulting ownership percentages. Essential for understanding dilution and investor economics.
What should founders watch out for?
Excessive dilution, full-ratchet anti-dilution, participating preferred liquidation preferences, and super-pro-rata rights. Always have a startup attorney review terms.
Related Terms
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Richard Ewing is a Product Economist and AI Capital Auditor. He helps companies translate technical complexity into financial clarity.
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