Capitalization Table Cap Table
Stands for: Capitalization Table
A document showing all of a company's securities, who owns them, on what terms, and the resulting ownership percentages.
Definition
A **capitalization table**, almost always shortened to **cap table**, is a structured record of every security a company has issued: founder shares, common stock, preferred stock by series, options, warrants, SAFEs, convertible notes, and any other equity-like instrument. For each line, it shows the holder, the number of shares or units, the price paid, the issue date, and any special rights such as liquidation preference or anti-dilution protection.
Modern cap tables are typically maintained on platforms like Carta, Pulley, AngelList, or Capdesk, replacing the spreadsheets that were the norm a decade ago. A well-maintained cap table supports scenario modeling, including pro forma views after a new financing round, exit waterfalls, and option pool top-ups.
The cap table is the single source of truth for ownership negotiations, due diligence, 409A valuations, and fundraising decisions. Errors are surprisingly common: misnamed shareholders, missed option grants, double-counted SAFEs, or failure to update the table after a stock split. Investors performing due diligence will reconcile the cap table to the company's share register, board approvals, and option grant agreements before closing.
When you'll encounter it
Founders work with the cap table from day one, when they decide co-founder splits and reserve an option pool. They revisit it at every financing round to model dilution, conversion of SAFEs and notes, and the impact of new option grants on existing ownership. Lawyers and auditors review the cap table during due diligence to confirm that all securities are properly authorized and documented. A clean, current cap table is one of the strongest signals of an investable startup; a messy one delays deals and can scare off investors.
FAQ
What is the difference between a fully diluted and an as-converted cap table?
A fully diluted cap table assumes that every option, warrant, and convertible security is exercised or converted into common shares, including the unallocated portion of the option pool. An as-converted view typically converts preferred stock to common but excludes unexercised options and unissued pool. Investors usually negotiate price based on fully diluted ownership to lock in the post-money pool top-up before closing.
Should startups use a cap table software platform?
Almost always yes once there are more than a handful of shareholders, options, or convertible securities. Platforms like Carta and Pulley enforce consistency, generate 409A valuations, automate option grant documentation, integrate with payroll for tax withholding on exercises, and produce investor-ready reports in minutes. Spreadsheets become error-prone fast as the company grows and add risk during due diligence.
References
- NVCA Model Cap Table https://nvca.org/model-legal-documents/
- Wikipedia: Capitalization Table https://en.wikipedia.org/wiki/Capitalization_table