Definition (canonical)
A cap table (capitalization table) is the ledger of who owns the company: every holder, every share class, every option and convertible — with the terms attached. It answers the only ownership question that matters: if we exited today, who gets what?
Fully diluted or you're lying to yourself
Ownership has two readings: issued shares (what exists now) and fully diluted (issued + option pool + everything convertible — SAFEs, notes, warrants — as if converted). All serious math runs fully diluted: your "25%" of issued shares is 19% fully diluted once the pool and the SAFEs land — and THAT number is what an acquirer's waterfall will use. Every convertible instrument is a time bomb of future dilution with terms (caps, discounts) that decide how big; a founder who cannot reproduce the fully diluted table from memory is negotiating blind.
Dilution across rounds — the worked chain
Start: two founders 50/50. Seed: 1M at 4M pre-money +15% pool created pre-money → founders drop to ~34% each. Series A: 4M at 16M pre → each new investor slice compresses everyone pro-rata → founders ~27%. Three lessons hide in the chain: pool creation PRE-money is paid by existing holders (negotiate its size against a real hiring plan — term sheet battleground); dilution is the price of a bigger pie, judged only against value created; and preference stacks matter more than percentages at modest exits — the waterfall, not the pie chart, pays out.
Hygiene that saves exits
Cap table chaos kills deals late and expensively: verbal equity promises, unsigned option grants, a departed co-founder holding 30% unvested-but-unrecovered, convertibles with contradictory terms. The discipline: one source of truth (spreadsheet is fine early; dedicated tooling once holders exceed ~15), every grant papered before announced, founder vesting from day one, scenario modeling before every round (model the NEXT round's dilution too), and an exit waterfall recomputed at each financing. Due diligence opens with the cap table — clean ones close deals weeks faster.
FAQ
Who should see the cap table? Holders see their own stake; full-table transparency is a culture choice — but the board and any serious investor see everything, always.
How do SAFEs sit on the table? As a shadow layer until conversion — model them at their caps to see worst-case dilution before the priced round makes it real.
What ownership should founders target long-term? No magic number: 20-30% combined at exit is common in venture paths; control terms often matter more than points.
Related: Equity · Term Sheet · ESOP · Venture Capital Reviewed: 2026-07-16 · Sources: venture finance canon