VC & PE Glossary
What Is Cap Table?
Updated
Definition
A cap table (capitalization table) is the record of who owns equity in a company — shares, options, warrants, and convertible instruments — and how ownership percentages change after each financing.
Useful for: Founders, Operators, Investors
A cap table is the official picture of a company’s equity ownership — who holds shares, options, and convertible securities, and what percentage each stake represents.
How it works
Early cap tables list founder common stock and an option pool. Each financing adds preferred stock classes with different prices, rights, and liquidation preferences. Convertible notes and SAFEs sit on a side ledger until they convert in a priced round.
Good cap table management tracks:
- Fully diluted ownership — includes unissued pool, outstanding options, and converting instruments
- Liquidation stacks — who gets paid first in an exit
- Voting control — often different from economic ownership due to dual-class stock or voting agreements
Tools range from Carta and Pulley to counsel-maintained spreadsheets. The legal source of truth is stock ledgers and filed certificates, not the model alone.
Each preferred series may carry different rights — senior vs junior liquidation preference, anti-dilution protection, pro rata rights. A clean cap table export labels those differences so new investors do not discover hidden stacks during legal review.
Why it matters
- Founders: Run cap table scenarios before you agree to terms. A messy table slows every future round and employee grant.
- Operators: Finance and HR need accurate fully diluted counts for offer letters and 409A valuations.
- Investors: Diligence starts with the cap table — hidden side letters, duplicate classes, or uncleared cap table risk can kill deals.
Common mistake
Showing investors only current ownership without fully diluted conversion of all notes, SAFEs, and promised option grants. Surprises at closing destroy trust.
Related ideas
See also cap table cleanup, cap table hygiene, liquidation preference, and certificate of incorporation.
Related terms
- Cap Table Cleanup — Cap table cleanup is the process of fixing historical equity records — consolidating duplicate entries, converting old instruments, clearing inactive shareholders, and aligning legal records before a major financing or exit.
- Cap Table Hygiene — Cap table hygiene is the ongoing discipline of keeping equity records accurate, timely, and audit-ready — granting with proper approvals, updating ledgers after each event, and reconciling models with legal files.
Common questions
Short answers for founders, LPs, and operators