# 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. ## 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](/content/learn/startups/fundraising/index.html), [employee option pool](/content/learn/startups/equity-management/option-pool/index.html) creation, and [secondary transactions](/content/learn/equity/liquidity-events/secondary-transactions/index.html). Cap tables also play a major role in [due diligence](/content/learn/private-funds/management/deal-flow/due-diligence/index.html) for [potential investors](/content/learn/startups/fundraising/investors/index.html) who are considering investing in your startup. ## 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. - **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**: Issued to investors during funding rounds, with special rights. - **Stock options**: Rights for an employee to buy shares at a fixed price in the future. - **Restricted stock**: Shares granted to employees subject to vesting. - **Warrants**: Similar to stock options but granted to investors. - **Convertible instruments**: Investments that turn into equity later. #### Share classes Different types of equity are organized into share classes, with varying rights. Common distinctions include common and preferred shares. #### Transaction history Tracks every event that changes ownership, crucial for valuations and due diligence. Typical transactions include funding rounds and stock grants. #### Valuations Gives shares a monetary value and may include: - **Pre-money valuation**: Value before a new funding round. - **Post-money valuation**: Value after the round. - **409A valuation**: Independent appraisal of a private company's fair market value. #### Dilution analysis Tracks the decrease in percentage of ownership due to new shares issued, important for growth and strategic management. #### Exit scenarios Models how money from sales, IPOs, or liquidity events would be distributed among shareholders. ### Common formats Early-stage startups may use simple Excel spreadsheets, while more complex organizations benefit from cap table software to manage changes accurately. ### Cap table example ## How to create a cap table Creating a cap table involves compiling and organizing ownership information into an accessible format. ### The initial setup Gather all current equity and ownership information to create an accurate 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 allocated to stakeholders. - **Shareholder details**: Names and roles of all equity holders. - **Equity types**: Details of issued securities. - **Funding rounds**: Details of previous financing rounds. - **Option pool allocation**: Information on shares reserved for employee equity plans. ### Add founders’ equity Record the initial equity split to set ownership percentages and help track dilution over time. ### Add investor equity Document investments from angel investors or during funding rounds, including total investment and terms associated with their equity. ### Add an option pool Reserve shares for future employees as equity compensation to incentivize growth. ## Cap table management best practices Regularly managing your cap table helps avoid costly errors and sustain trust with stakeholders. ### Maintain accurate records Your cap table serves as the sole source of truth. Monitor data regularly. ### Use an organized format An organized layout aids clarity and communication. ### Update your cap table regularly Keep the document current with all transactions to remain investor-ready. ### Plan for dilution Model the impact of future fundraising on ownership percentages. ### Ensure compliance Follow regulations to avoid penalties, particularly regarding valuations and reporting. ## Tools for cap table management Two main choices exist: spreadsheets or cap table software. As complexity grows, software becomes necessary for efficiency and accuracy. ### Cap table software Modern software automates workflows and provides secure access to manage equity effectively. ### Frequently asked questions about cap tables 1. **How do I create a cap table?** - List all stakeholders with their shares, types, and ownership percentages. 2. **Can an LLC have a cap table?** - Yes, it tracks equity even for membership units. 3. **Is a cap table a public document?** - No, it is confidential for private companies.