What is a cap table in simple terms?

A cap table is a spreadsheet or ledger showing who owns a company and how much. It lists every holder of common stock, preferred stock, options, and convertible instruments such as SAFEs, with their share counts and ownership percentages. It summarises the company's signed equity documents rather than replacing them.

What does fully diluted mean on a cap table?

Fully diluted counts every share that exists plus every share that could be issued under existing commitments: granted options, the unallocated option pool, warrants, and often converting SAFEs and notes. It is the denominator investors use to price a round. Definitions vary between documents, so check what each one includes.

Are SAFEs included on a cap table?

Yes, though not as shares. A SAFE is a right to future shares, so it usually appears in a separate section listing the amount invested, cap, discount, and any side letters. A useful cap table model also shows the shares each SAFE would convert into at a realistic next-round price.

Who maintains a startup's cap table?

Usually the company, through a founder or finance lead, often with dedicated cap table software and its corporate counsel. Whoever maintains it should update it only when the underlying documents are signed and approved, because the table is a record of those documents and diligence will compare the two.

What is the difference between a cap table and a waterfall?

A cap table shows ownership: who holds which shares and what percentage. A waterfall shows payouts: how proceeds from a sale would be divided after liquidation preferences, participation, and conversion choices are applied. The waterfall is built from the cap table, but in modest exits the two can tell very different stories.

What Is a Cap Table? A Startup Definition

A cap table, short for capitalization table, is the record of who owns a startup's equity and who has the right to acquire it: founders' common stock, investors' preferred stock, granted options and the unallocated pool, warrants, and outstanding SAFEs or convertible notes. It shows each holder's shares and percentage on an issued and a fully diluted basis.

The definition

Cap table is short for capitalization table. A company's capitalization is its equity structure: the classes of stock it has authorised, the shares it has actually issued, and the rights it has granted to acquire more. The cap table lays that structure out as a grid, with holders down the side and classes of security across the top, so anyone can see who owns what percentage of the company.

At incorporation it may have two rows. By Series A it can have dozens, covering founders, employees, angels, funds, and instruments that are not yet shares at all. The grid stays the same shape. It just gets taller and wider.

One point of definition matters more than the rest. A cap table records ownership; it does not create it. Shares exist because a board authorised them and a holder signed for them. The table summarises those documents, and when the two disagree, the documents win.

What the rows hold

Each row is a holder or a reserved block. A typical startup cap table groups them like this.

Common stock

Founders' shares, usually issued at formation for a nominal price, and shares from exercised employee options. Founder common is often subject to vesting and a company repurchase right, which the cap table may show as vested and unvested columns.

Preferred stock

Shares sold to investors in priced rounds, grouped by series: Series Seed, Series A, and so on. Each series carries its own price, liquidation preference, and conversion ratio into common, so it gets its own column.

The option pool

Shares reserved under the equity incentive plan. The cap table splits the pool into options granted, options exercised, and shares still available to grant. Unvested grants still count, because they will become shares if employees stay.

Convertible instruments

SAFEs, convertible notes, and warrants outstanding. They are not shares yet, so they usually sit in a separate section showing amount invested, valuation cap, discount, and interest where relevant. A complete model shows the shares each would convert into at a plausible next-round price.

What the columns show

Shares by class. Common, each series of preferred, options, and other rights, one column each.

Issued and outstanding. Shares that actually exist today. This is the basis for stockholder votes.

Fully diluted. Outstanding shares plus everything that could become shares: granted options, the unallocated pool, warrants, and often converting SAFEs and notes. This is the basis investors use to set a price per share.

Percentages. Each holder's share of the issued total and of the fully diluted total. The two numbers differ, sometimes by a lot.

Supporting detail. Price paid, issue date, certificate or ledger reference, and vesting status. Behind the summary, the authorised share count in the charter sets the ceiling the company cannot exceed without amending it.

A small cap table, in prose

An illustrative company after a small priced seed and one later SAFE.

Two founders hold 4,000,000 shares of common stock each, 8,000,000 in total.
A seed investor holds 2,000,000 shares of Series Seed preferred.
The option pool reserves 1,500,000 shares, of which 500,000 have been granted to employees.
A 500,000 post-money SAFE with a 10,000,000 cap is outstanding.

Issued and outstanding: 10,000,000 shares. Each founder holds 40 percent and the seed investor 20 percent.

Fully diluted, before the SAFE: 11,500,000 shares. Each founder holds about 34.8 percent, the seed investor about 17.4 percent, and the pool about 13.0 percent.

The SAFE: at its cap it converts into about 5 percent of the company as the SAFE defines capitalization, which includes the pool and converting securities. It reduces every other percentage at the next priced round.

The same company shows three different ownership figures for each founder, all correct. Which one matters depends on the question being asked.

Why it matters

Pricing a round. Investors divide the pre-money valuation by the fully diluted share count to get the price per share. An inaccurate count misprices the round.

Dilution decisions. Every SAFE, grant, and pool increase changes the denominator. Founders who track it can see what each decision costs before making it.

Hiring. Offers are often framed as a percentage of fully diluted shares. Grants need an accurate count behind them.

Exits. Combined with each series' liquidation preference, the cap table drives the waterfall that decides who gets paid what in a sale. Percentage ownership alone does not.

Diligence. Every investor and acquirer reconciles the cap table against board consents, stock purchase agreements, option grants, and SAFEs. Gaps cause delay at the worst moment.

This page is general information, not legal advice. Equity issuances, vesting, and option grants involve legal and tax decisions that depend on your facts and jurisdiction, assumed here to be the United States; get counsel before acting.

Frequently asked questions

What is a cap table in simple terms?: A cap table is a spreadsheet or ledger showing who owns a company and how much. It lists every holder of common stock, preferred stock, options, and convertible instruments such as SAFEs, with their share counts and ownership percentages. It summarises the company's signed equity documents rather than replacing them.
What does fully diluted mean on a cap table?: Fully diluted counts every share that exists plus every share that could be issued under existing commitments: granted options, the unallocated option pool, warrants, and often converting SAFEs and notes. It is the denominator investors use to price a round. Definitions vary between documents, so check what each one includes.
Are SAFEs included on a cap table?: Yes, though not as shares. A SAFE is a right to future shares, so it usually appears in a separate section listing the amount invested, cap, discount, and any side letters. A useful cap table model also shows the shares each SAFE would convert into at a realistic next-round price.
Who maintains a startup's cap table?: Usually the company, through a founder or finance lead, often with dedicated cap table software and its corporate counsel. Whoever maintains it should update it only when the underlying documents are signed and approved, because the table is a record of those documents and diligence will compare the two.
What is the difference between a cap table and a waterfall?: A cap table shows ownership: who holds which shares and what percentage. A waterfall shows payouts: how proceeds from a sale would be divided after liquidation preferences, participation, and conversion choices are applied. The waterfall is built from the cap table, but in modest exits the two can tell very different stories.