What is a cap table? A founder's guide

Author: The Carta Team
Read time: 15 minutes
Published date: November 6, 2025

This guide explains everything you need to know about cap tables, from building your first one to managing company ownership as you prepare for fundraising and growth.

Contents

• What is a cap table? A founder's guide
• What is a cap table?
• The structure of a cap table
• Key components
• Common formats
• Cap table example
• How to create a cap table
• The initial setup
• Add founders’ equity
• Add investor equity
• Add an option pool
• Cap table management best practices
• Maintain accurate records
• Use an organized format
• Update your cap table regularly
• Plan for dilution
• Ensure compliance
• Tools for cap table management
• Cap table template
• Why spreadsheets don’t scale
• Cap table software
• Free cap table software
• Frequently asked questions about cap tables

What is a cap table?

A cap table, short for capitalization table, is a document that details your company’s equity ownership structure. It is the official record of who owns what, listing every shareholder in the company, the number of shares they own, and the types of equity they have. For founders, investors, and employees, the cap table is the single source of truth for your company's ownership.

Maintaining an accurate cap table is especially important for startups and high-growth companies where ownership percentages can change dramatically following funding rounds, employee option pool creation, and secondary transactions. Cap tables also play a major role in due diligence for potential investors who are considering investing in your startup.

01 Intro: What's a cap table?

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This video gives an introduction to cap tables as part of Carta’s free Cap Table 101 curriculum.

The structure of a cap table

A cap table’s structure can vary depending on the size and stage of the company. As a company matures, its cap table evolves from a simple record of founders’ shares into a complex document detailing funding rounds, employee equity plans, and convertible instruments. No matter how complex it becomes, the goal is to maintain a clear and accurate record of equity ownership.

Key components

A cap table is organized into categories that detail ownership details, transaction history, and other financial information. Common components of a cap table include:

Ownership details

This is the most basic part of the cap table, answering the fundamental question: “Who owns what?” It’s the starting point for understanding your company’s ownership breakdown.

This section outlines who owns all types of equity in the company (such as shares, options, warrants, and convertibles), the total ownership stake, and what percentage of the company that stake represents.

• Shareholder information: Shareholder names, entities, and roles like founders, investors, employees, and advisors.
• Number of shares: Total shares owned by each shareholder.
• Ownership percentage: The percentage of the company owned.

Types of equity

Not all equity is the same, and your cap table distinguishes between the different types you issue and the terms of each. As a founder, you'll encounter several common forms of equity.

• Common stock: Basic ownership shares in a company.
• Preferred stock: This class of stock typically issued to investors during funding rounds.
• Stock options: The right for an employee to buy a set number of shares at a fixed price.
• Restricted stock: Shares granted to employees subject to vesting.
• Warrants: Similar to stock options, often granted to investors.
• Convertible instruments: Investments that turn into equity at a later date.

Share classes

Different types of equity are organized into share classes, which may have different rights. The most important distinction is between common and preferred shares.

Transaction history

This section operates as the official logbook of your company’s ownership, tracking events that change ownership on your cap table.

Maintaining a detailed transaction history is important for valuations audits and due diligence. Examples include:

• Funding rounds where new shares are issued to investors.
• Stock grants issued to new hires or advisors.
• Employees exercising their stock options to purchase shares.

Valuations

Valuations give your company's shares a monetary value, which is important for both investors and employees. The cap table tracks these values as they change:

• Pre-money valuation
• Post-money valuation
• 409A valuation

Dilution analysis

A well-maintained cap table allows you to track dilution, indicating how issuing new shares affects existing shareholders.

Exit scenarios

Modeling exit scenarios involves projecting distribution among all shareholders from a future sale or IPO based on share class rights and liquidation preferences.

Common formats

Choosing the right format for a cap table is based on your company’s needs. Early-stage startups often use simple Excel spreadsheets, but as your company matures, a cap table software solution is usually needed.

Cap table example

While there’s no standard format, here’s an example of what a cap table could look like:

How to create a cap table

Now that you understand the components, you can build your first cap table. The best option depends on your company’s stage and ownership structure.

The initial setup

Gather all the current equity and ownership information and legal documents to create a complete and up-to-date picture of your company’s ownership structure. You will need:

• Total authorized shares: Maximum amount of shares the company can issue.
• Issued and outstanding equity: Number of shares currently allocated to stakeholders.
• Shareholder details: Names, roles, and contributions of all equity holders.
• Equity types: Details of issued securities including common and preferred stock, stock options, warrants, and convertible notes.

Add founders’ equity

Record the initial equity split between you and your co-founders. This section documents who gets what percentage of the company at its creation.

Add investor equity

If you've raised money from an angel investor or through a pre-seed round, document this in the cap table.

Add an option pool

An option pool is a portion of your company's shares reserved for future employees as equity compensation.

Cap table management best practices

As your company grows, your cap table changes from a simple record into a strategic tool. Regular cap table management helps you avoid costly errors, remain compliant with regulations, and build trust with stakeholders.

Maintain accurate records

Create a single source of truth: Your cap table must be the only record of ownership to eliminate confusion and financial consequences.

Use an organized format

Provide clarity: An organized cap table is easier to share and prevents misunderstandings.

Update your cap table regularly

Keep it live: A cap table is a dynamic document that changes frequently.

Plan for dilution

Model the future: Use scenario modeling to understand how new investments will impact ownership percentages.

Ensure compliance

Follow the rules: Use a cap table software with built-in compliance.

Tools for cap table management

As a founder, you have two main choices for managing your cap table: a simple spreadsheet or dedicated cap table software.

Cap table template

Download Carta’s free cap table template for a useful starting point.

Why spreadsheets don’t scale

Relying on a spreadsheet to manage your cap table is a common mistake. More than 50,000 companies now use dedicated platforms to manage equity, establishing a best practice for scalable and accurate management.

Cap table software

Cap table software automates workflows, provides a secure portal for stakeholders, and saves you time and legal fees.

Free cap table software

Carta Launch offers our professional platform for free, allowing you to get started from day one with startups that have up to 25 stakeholders and have raised less than $1 million.

Frequently asked questions about cap tables

How do I create a cap table?

Start by listing all shareholders in your company, including founders, investors, and employees. Record the number of shares they own and their types.

Can an LLC have a cap table?

Yes, while LLCs issue membership units instead of shares, a cap table is still needed to track ownership percentages.

Do all companies have a cap table?

Any company with more than one owner or that plans to issue equity needs a cap table.

Is a cap table a public document?

No, for private companies, the cap table is a highly confidential document.

Does a cap table include equity grants for service providers and advisors?

Yes, a cap table should include equity grants for service providers and advisors.

How do I prepare my cap table for due diligence or audits?

Verify all equity issuances with supporting legal documents, and clearly document ownership percentages and vesting schedules.