What it means
A cap table, short for capitalization table, is the record of who owns the company. It lists every holder of common and preferred shares, every option and warrant, and every SAFE or convertible note that could become shares later.
Think of it as the company's ownership ledger. Every round and every exit is priced off it.
It shows two views. Issued shares are the ones that exist today. Fully diluted adds everything that could become a share: outstanding options, the unissued part of the option pool, warrants, and SAFEs and notes as if converted. Investors almost always talk in fully diluted terms.
Each change needs a board approval behind it and should be recorded the same day. The cap table also has to agree with the equity section of the balance sheet, from share counts to the money raised and stock comp booked to paid-in capital.
Acme's two founders hold 4,000,000 shares each. The board creates a 1,000,000-share option pool and grants 200,000 options from it to the first engineer. Issued shares are 8,000,000. Fully diluted, before counting the SAFE an angel holds, the total is 9,000,000, because the grant comes out of the pool, and each founder owns about 44.4%. Add the SAFE as converted and every percentage moves down.
The option pool, SAFEs and the next priced round all change this table. In diligence, the investor's lawyers tie it to board minutes and the balance sheet, one issuance at a time.
Why it matters. Every raise, grant and exit is priced off it. If it doesn't match your board approvals and the equity on your balance sheet, diligence stops until it does.
Try it with your numbers
Change any number. The working below updates as you type.
Fully diluted % = Holder's shares ÷ (Issued + Options + Unissued pool + SAFEs as converted)Shares they'd convert into, estimated.
Fully diluted shares
9,000,000
How it’s worked out
- 1Issued shares4,000,000 + 4,000,0008,000,000
- 2Fully diluted shares8,000,000 + 200,000 + 800,0009,000,000
- 3Founder A, fully diluted4,000,000 ÷ 9,000,00044.44%
| Holder | Shares | Issued % | Fully diluted % |
|---|---|---|---|
| Founder A | 4,000,000 | 50.00% | 44.44% |
| Founder B | 4,000,000 | 50.00% | 44.44% |
| Options granted | 200,000 | — | 2.23% |
| Unissued pool | 800,000 | — | 8.89% |
| Total | 9,000,000 | 100.00% | 100.00% |
Each percentage is rounded to 0.01% by largest remainder, so each column adds to exactly 100.00% and no row is off by more than 0.01%.
Common questions
What's the difference between issued and fully diluted shares?
Issued shares exist today. Fully diluted adds everything that could become a share: outstanding options, the unissued pool, warrants, and SAFEs and notes as if converted.
Does the cap table have to match my books?
Yes. Share counts, the money raised and stock comp all show up in equity. An auditor will tie the two, so differences are better found early.
How do SAFEs show up before they convert?
A SAFE has no share count until it converts, so model it: on a post-money SAFE, the investment divided by the cap gives its percentage of the company before the next round. Show the model next to the issued shares, labeled as converted.
Where it comes up
The glossary entries, founder guides and lessons on this site that use the term and link here.
- EquityThe residual interest in the assets that remains after deducting liabilities (FASB CON 8 ¶E61)Glossary
- Audit-ready books before your Series AInvestors, lenders and auditors ask for the same things: accrual statements, reconciled accounts and support for every balance. How to be ready first.Guide · 4 min
- US GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.Guide · 4 min
- How to account for SAFEs on your balance sheetA SAFE is cash today and shares later. Why it usually sits with liabilities, how the cap and discount set conversion, and what to book at the priced round.Guide · 4 min
- Stock options, 409A valuations and vesting for startupsHow option strike prices are set by a 409A valuation, how vesting and the cliff work, and why ASC 718 makes every grant an expense on your P&L.Guide · 4 min
- Contractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.Guide · 4 min
- Form 1120: what to give your tax preparer, and whenWhat a startup hands its tax preparer for Form 1120: closed books, a balance sheet that ties to Schedule L, book-to-tax items, ownership and 1099s.Guide · 5 min
- Balance sheet explained for startupsAssets equal liabilities plus equity. What each startup line means, from deferred revenue to the SAFE and the accumulated deficit, and why it must balance.Guide · 7 min
- The accounting equationAssets = liabilities + equity is not a formula you apply at period end. It is true after every single entry, and that is what makes the books provable.Lesson 2
- Accounts, and the five typesEvery account belongs to exactly one of five types, and its type decides which side increases it. Get the type right and the entry writes itself.Lesson 3
- The balance sheetThe other three account types, at one instant — and the single line where the month's profit lands, which is what ties the two statements together.Lesson 11
Read further
General information for US companies, not tax, legal or accounting advice. Check the specifics with a CPA before you act on them.