Cap Table

The running ledger of who owns what percentage of a company, on what instrument and what terms, before and after each financing event.

Example

A cap table lists founders' common stock, each SAFE and note outstanding with its cap and discount, the option pool, and every priced round's preferred shares.

Important

A cap table is not public and is only as accurate as its most recent update - a verbally quoted ownership percentage is worthless without seeing the underlying document and its date.

Related terms

• Pre-Money Valuation — A company's agreed value immediately before a financing round's new money is added.
• Dilution — The reduction in your percentage ownership of a company when it issues new shares to someone else.
• SAFE (Simple Agreement for Future Equity) — A contract that gives an investor the right to receive shares in the future, at a price set by a formula, rather than issuing shares immediately. It is not debt and carries no interest or maturity date.

Lessons that explain it

• A cap table is a list of who owns what, and it only ever gets longer — 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)
• A smaller slice of a much bigger company is usually the good outcome — Each funding round reduces existing holders' percentage. Dilution is not a loss in itself; it becomes one when the company's value does not rise enough to compensate, as in a down round. (12 min)
• What the cap table tells you that the founders did not — A cap table reveals founder motivation, past decisions and future obstacles. Low founder ownership, dead equity, unconverted instruments and messy structures are signals worth reading before investing. (10 min)
• Vesting decides who keeps equity; the pool decides how much is left to give — Founder and employee shares are usually earned over time. Vesting protects the company from dead equity, and pool size determines whether it can hire without another dilutive top-up. (11 min)
• A SAFE is a promise of future shares, and post-money SAFEs stack on the founders — A SAFE gives an investor the right to shares at a future priced round, usually at a valuation cap. With post-money SAFEs, each additional SAFE dilutes the founders rather than earlier SAFE holders. (12 min)
• A founder who leaves without vesting can own a third of the company forever — Founder agreements, vesting and leaver provisions decide what happens when a founder departs. Diligence confirms they exist, are signed and would work as intended. (10 min)

All 578 terms in the Investing glossary