A capitalisation table records every share, option and convertible claim in a company. Ownership percentages depend on whether you count only issued shares or everything that could become shares.
9 min read · Level 3
A cap table is one of the few documents in a startup that cannot be spun. Percentages either add to 100% or they do not, and instruments either exist or they do not. I would read it before the deck, because it tells you what has already been promised to whom, and that constrains everything the deck is trying to sell you.
A cap table lists every holder of equity in a company and how much they own. A simple one after a seed round:
Holder Shares Fully diluted % Founder A 4,000,000 40% Founder B 4,000,000 40% Option pool 1,000,000 10% Seed investors 1,000,000 10% Total 10,000,000 100%
Two ways of counting matter:
Shares outstanding shares actually issued today Fully diluted outstanding shares plus all options, warrants and convertibles that could become shares
If 400,000 of the pool's options have been granted but none exercised, shares outstanding are 9,000,000 and the founders each own 4,000,000 / 9,000,000, about 44.4%. On a fully diluted basis they own 40%. Investors and serious analysis use fully diluted figures, because that is the ownership that will exist if everything converts.
Other items that belong on the table:
Unconverted SAFEs and convertible notes Warrants Different share classes, such as common and preferred Vesting schedules for founders and employees
The table only moves one way on ownership: new rounds, new options and conversions add shares, so existing holders' percentages fall unless they buy more.
Because your percentage ownership decides your share of any exit, and the difference between outstanding and fully diluted counts can be large.
It also shows what is not yet visible. SAFEs and notes that have not converted are future shares, and ignoring them overstates everyone's current ownership.
And the cap table is a history of every decision the company has made about equity, which later investors read carefully.
Educational, not personalised financial advice. Nothing in the Investor Academy is a recommendation to buy, sell or hold anything — what is right for you depends on your own circumstances and the rules where you live.
The same company, counted two ways. It also has 500,000 of shares owed to SAFE holders that will convert at the next priced round.
Count Total shares Founder A % Outstanding shares only 9,000,000 about 44.4% Fully diluted, excluding SAFEs 10,000,000 40.0% Fully diluted, including SAFEs 10,500,000 about 38.1%
An angel told "Founder A owns 44%" is looking at the most flattering count. The honest current figure, including claims already promised, is about 38%.
Reading ownership percentages from shares outstanding rather than on a fully diluted basis including unconverted instruments.
Request a table including all options, warrants, SAFEs and notes, not just issued shares.
For SAFEs and notes, note how many shares they will become and at what price.
Divide each holder's shares by the fully diluted total to confirm the figures presented.
Before investing in any private company, and whenever ownership figures are quoted.
Do not rely on cap table summaries in a pitch deck; ask for the full table and verify it.
Founders and early investors commonly describe being surprised at a priced round by how much dilution unconverted SAFEs and notes created, because those instruments had not been shown as shares on the cap table. Standard post-money SAFE documents from Y Combinator were revised in 2018 partly to make each holder's ownership clearer.
Unconverted instruments are future shares. Include them in every ownership calculation.
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