Fundraising
Cap table (Capitalization table)
A spreadsheet or system that records who owns what in a company — share class, share count, ownership percentage, vesting schedule, and option grants.
In plain English
The truth about who really owns the company. Keep it clean from day one; cleaning it up later costs lawyers and trust.
Example
Two co-founders: 4,500,000 common shares each (45% each). 10% option pool (1,000,000 shares) created at incorporation. After a $1M SAFE at $5M cap converting into a $5M pre-money priced round of $1.5M, the cap table records new preferred shares, updated founder ownership (~32% each), pool (still ~10%), and investor (~23%).
Why it matters
Investors will diligence the cap table before they wire. Inconsistencies (verbal promises, undocumented option grants, side letters) are deal-killers. Tools like Carta, Pulley, and Capdesk exist for a reason; a spreadsheet stops scaling around the seed round.
Common mistakes
- Granting equity by handshake without board approval or share issuance
- Forgetting to update the cap table when SAFEs convert
- Issuing options without an approved 409A valuation (US) — creates tax liability for grantees
- Founder shares not on a vesting schedule (huge red flag for investors)