A capitalization table (cap table) is simply a structured way of answering “who owns what, and in what form?” for your startup. It lists every equity holder, the types of securities they own (common, preferred, options, SAFEs, etc.), and their percentage of the company on both an undiluted and diluted basis.

Good cap tables help avoid confusion and disputes over ownership by turning a stack of legal documents into a clear, numeric view of the company’s capital structure. Investors, lawyers, and CPA firms rely on the information in your cap table when they’re doing tax returns, audits, or due diligence.

How a Typical Cap Table Is Structured

Most cap tables are organized as a spreadsheet (or look like one inside cap table software):

  • Rows (down the left):
    • Each row is a shareholder or equity holder: founders, employees, advisors, early angels, VC funds, and sometimes option or warrant holders.
  • Columns (across the top):
    • Security types:
      • Common stock (often where founders, employees with exercised options, and early seed equity show up).
      • Preferred stock by round or class (Seed Preferred, Series A Preferred, Series B Preferred, etc.).
      • Option and warrant information (granted, vested, exercised, and unexercised).
    • Totals and ownership:
      • Total shares owned (by holder, across all classes).
      • Undiluted ownership percentages (based on currently outstanding shares).
      • Fully diluted ownership percentages (assuming all options, warrants, SAFEs/notes convert).

At the bottom of the table, there is usually a totals row that sums:

  • Total shares outstanding by class (e.g., total common, total Series A, total Series B).
  • Total options granted and remaining in the option pool.
  • Total shares on a fully diluted basis.

Step-by-Step: How to Read a Cap Table

When you open a cap table, read it in this order:

  1. Start with the bottom totals row
    • Find the total shares outstanding in each class (e.g., total common and each preferred round).
    • Look for the total fully diluted shares (including the full option pool and any other convertibles). This is the denominator for fully diluted ownership.
  2. Look at the option pool
    • Identify:
      • Options granted.
      • Options vested.
      • Remaining ungranted pool.
    • Unvested or ungranted options still dilute everyone when you think about future ownership, so you’ll often see them included in the fully diluted share count.
  3. Review each shareholder’s row
    For each founder, investor, or employee:
    • Check the number of shares they own in each class (common vs. each preferred round).
    • Confirm whether exercised option shares are included in the “common” column.
    • Look at their total shares and compare undiluted vs. fully diluted ownership percentages.
  4. Understand undiluted vs. fully diluted percentages
    • Undiluted % = total shares owned / total currently outstanding shares.
    • Fully diluted % = total shares owned / total fully diluted shares (including all options, warrants, and other convertibles). Investors and acquirers usually care about fully diluted numbers, because that reflects the “real” economics if everything converts.

What’s Included in a Good Cap Table

A detailed, well-maintained cap table typically includes:

  • Shareholder information
    • Names of shareholders/equity holders (people and entities).
  • Share counts
    • Number of shares authorized and outstanding, by class (common and each preferred series).
    • For option and warrant holders: total granted, vested, exercised, and remaining.
  • Ownership and economics
    • Percent ownership (undiluted and fully diluted).
    • Stock class for each holding (common, Seed Preferred, Series A Preferred, etc.).
    • Price per share for each round (e.g., what investors paid in each financing).
    • Value or implied value per holder at the last round price.
  • Key dates and cash paid
    • Date shares or options were granted/acquired.
    • Cash paid in (what each investor or employee actually paid for their shares/options).

This level of detail is what lets your CPA firm prepare accurate tax returns, your lawyers confirm who needs to sign what, and your future investors quickly understand your cap structure.

How New Rounds (Series A, B, C) Show Up

When you raise a new preferred round (Series A, B, C, etc.), the cap table expands to show:

  • A new preferred stock column for that round (e.g., “Series A Preferred”).
  • New investor rows (or updated rows for existing investors who are adding capital).
  • Updated totals at the bottom, including:
    • New total shares for each class.
    • New fully diluted share count.
    • Revised ownership percentages for everyone.

If you’re using modern cap table software and working with an experienced startup law firm, they will:

  • Add the new preferred shares and prices based on the closing documents.
  • Convert SAFEs and convertible notes into equity at the correct caps/discounts.
  • Recalculate both undiluted and fully diluted ownership for each holder.

If you are still on spreadsheets, a new priced round is the moment to move into a proper cap table management platform. Mistakes in manually updating the cap table after a Series A or later round can create multimillion‑dollar issues at exit or in diligence.

Practical Tips for Founders Reading Their Cap Table

  • Know your own fully diluted ownership. Don’t just look at your common share count; always understand your fully diluted percentage after accounting for the full option pool and all preferred.
  • Watch the option pool. Keep an eye on how much is ungranted and how much you’ll need before the next round. Investors often negotiate pool increases as part of a financing round, and that dilutes everyone.
  • Check for consistency with your legal docs and bank records. Periodically reconcile your cap table against stock purchase agreements, SAFEs, notes, and actual wires received. If something doesn’t match, fix it early.
  • Make sure employees understand their grants.
    Your team should know:
    • How many options they have.
    • Their vesting schedule and cliff.
    • What “fully diluted ownership” roughly means for them.

Reading a cap table is critical for founders and CEOs – it’s how you understand who really owns the company and what each financing or hire does to that picture. Your lawyers and cap table software help keep that picture accurate, investor‑ready, and easy to explain.