Cap Table (Capitalization Table)

A Capitalization Table (Cap Table) is a document that provides a comprehensive breakdown of a company's equity ownership. It shows all securities issued (common stock, preferred stock, options, warrants) and who owns them, along with their respective percentages and valuations.

Components of a Cap Table

Component	Description
Shareholder Name	Individual or entity holding equity
Security Type	Common, Preferred, Options, Warrants
Shares Owned	Number of shares held
Ownership %	Fully diluted ownership percentage
Investment Amount	Capital invested
Price Per Share	Issue price of shares

Basic vs Fully Diluted Cap Table

• Basic Cap Table: Only includes issued and outstanding shares
• Fully Diluted Cap Table: Includes all securities that could convert to equity (options, warrants, convertible notes, SAFEs)
• Investors typically care about fully diluted ownership

Sample Cap Table Evolution

Founding:

• Founder A: 5,000,000 shares (50%)
• Founder B: 5,000,000 shares (50%)
• Total: 10,000,000 shares

After Seed Round:

• Founder A: 5,000,000 (40%)
• Founder B: 5,000,000 (40%)
• Seed Investor: 2,500,000 (20%)
• Total: 12,500,000 shares

Cap Table Management Tools

Tool	Best For	Pricing
Carta	US companies, comprehensive	Paid
Ledgy	European startups	Freemium
Pulley	Startups, modeling	Freemium
Excel/Google Sheets	Early stage, simple structures	Free

Common Cap Table Mistakes

• Not updating after every financing
• Ignoring option pool dilution
• Confusing pre-money and post-money
• Not tracking convertible securities
• Errors in waterfall calculations
• Not considering liquidation preferences

Waterfall Analysis

A waterfall shows how proceeds are distributed in an exit scenario, considering:

• Liquidation preferences
• Participation rights
• Conversion rights
• Common stock distribution