Capitalization Table (Cap Table)

A capitalization table, or cap table, is a structured record—usually a spreadsheet—detailing a company’s ownership structure. It lists equity holders, types of securities, share counts, and ownership percentages, and it’s especially important for startups and early-stage companies.

Key takeaways

• A cap table shows who owns what in a company and how ownership is diluted over time.
• It typically includes common and preferred shares, warrants, convertible securities, and stock options.
• Accurate, up-to-date cap tables are essential for fundraising, valuation, and major corporate decisions.

How a cap table works

A basic cap table maps:
* Owners (founders, employees, investors)
Types of securities they hold (common, preferred, warrants, options, convertible notes)
Number of shares or rights held
Share price or strike price (when applicable)
Ownership percentage and fully diluted ownership

More advanced cap tables model financing scenarios, option exercises, conversions, mergers, and IPOs to show the impact on ownership and valuation.

Creating and maintaining a cap table

Practical guidelines:
* Organize owners (rows) and security types (columns) so each owner’s holdings occupy one row.
Calculate each owner’s stake: number of shares × share price (when relevant) and convert to percentage of total outstanding or fully diluted shares.
Track convertible instruments and options to produce a fully diluted view.
Update the cap table after every corporate action: funding rounds, option grants/exercises, transfers, redemptions, cancellations, and expirations.
Consider ordering owners by founder/executive, or by descending ownership, depending on audience and purpose.

Use a spreadsheet or specialized cap table software for accuracy and scenario analysis.

Special considerations

• Dilution: New funding rounds and option grants reduce existing ownership percentages—model this clearly.
• Employee options: Granting, vesting, exercising, and termination of options all change the cap table.
• Convertible instruments: Terms and conversion mechanics (e.g., discounts, caps) affect future ownership.
• Transfers and secondary sales: Redemptions, transfers or sales by investors must be recorded promptly.

Why startups need cap tables

Startups typically start with few owners (founders, early investors, friends/family). As they raise capital (angel, VC, etc.), ownership becomes more distributed. A cap table:
* Keeps track of who owns what
Shows dilution effects from fundraising
Is required for investor diligence and for planning exits or IPOs

What information a cap table tracks

• Share classes and counts (common, preferred)
• Convertible securities, warrants, and options (including strike prices and vesting schedules)
• Equity grants and stock-based compensation
• Current ownership percentages and fully diluted percentages
• Implied market value per share (when valuation or share price is available)

Are cap tables public?

Private companies are not required to disclose cap tables. Startups commonly restrict access to serious investors and advisors. Public companies disclose major shareholders and insider holdings after going public, but detailed pre-IPO cap tables remain private.

Bottom line

A cap table is a central tool for managing ownership, valuation, and financing decisions. Keeping it accurate and up to date enables founders, investors, and executives to understand current ownership, plan fundraising, and evaluate how transactions will affect control and value.