What is a cap table? A founder's guide

Author: The Carta Team
Read time: 15 minutes
Published date: 6 November 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?
• The structure of a cap table
• Key components
• Common formats
• Cap table example
• How to create a cap table
• Cap table management best practices
• Tools for cap table management
• 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.

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 section outlines who owns all types of equity in the company, the total ownership stake, and what percentage of the company that stake represents.

• Shareholder information: 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

• Common stock: Basic ownership shares.
• Preferred stock: Issued to investors during funding rounds.
• Stock options: The right for an employee to buy a set number of shares.
• Restricted stock: Subject to vesting and restrictions.
• Warrants: Similar to stock options but often granted to investors.
• Convertible instruments: Investments that turn into equity later.

Share classes

Different types of equity are organized into share classes. The most important distinction for a startup founder is between common and preferred shares.

Transaction history

This section tracks events that change who owns what on your cap table, important for valuations audits and due diligence.

Valuations

These are some types of valuations you might include in your cap table:

• Pre-money valuation: The value of the company before a new funding round.
• Post-money valuation: The value of the company after the funding round.
• 409A valuation: Independent appraisal of a company's fair market value.
• Price-per-share: The value of each preferred share sold in the funding round.

Dilution analysis

When you issue new shares, the ownership percentage of existing shareholders decreases. This is called share dilution, and your cap table is where you track it.

Exit scenarios

This involves running a waterfall analysis, projecting how money from a future sale or IPO would be distributed among all shareholders.

Common formats

Choosing the right format for a cap table depends on your company's needs. Early-stage startups may use simple Excel spreadsheets, but a cap table software solution is usually needed as the company grows.

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

Creating a cap table involves compiling and organizing your existing equity ownership information into a structured format. The process sets the foundation for all future equity management.

The initial setup

Gather all equity and ownership information and legal documents, including:

• Total authorized shares: The maximum amount of shares the company can issue.
• Issued and outstanding equity: The number of shares currently allocated to stakeholders.
• Shareholder details: Names, roles, and contributions of all equity holders.

Add founders’ equity

Document the initial equity split between co-founders, recording the number of common shares assigned to each based on agreed ownership split.

Add investor equity

Record the total amount invested by investors and the total number of shares purchased.

Add an option pool

Reserve a portion of your shares for future employees as equity compensation.

Cap table management best practices

Regular cap table management helps avoid costly errors and build trust with your stakeholders.

Maintain accurate records

Create a single source of truth for your cap table, eliminating confusion and risk.

Use an organized format

Provide clarity and use consistent layouts and labels for your cap table.

Update your cap table regularly

A cap table is a dynamic document that must be updated in real time.

Plan for dilution

Model dilution scenarios when preparing to issue new shares during fundraising.

Ensure compliance

Use a cap table software with built-in compliance support to avoid penalties and stay audit-ready.

Tools for cap table management

You have two choices for managing your cap table: a simple spreadsheet or dedicated cap table software. Modern software is designed for handling complexities in equity management.

Frequently asked questions about cap tables

• How do I create a cap table?: List all shareholders and record their shares and percentages.
• Can an LLC have a cap table?: Yes, LLCs track ownership percentages and capital accounts.
• Do all companies have a cap table?: Yes, necessary for clear ownership records.
• Is a cap table a public document?: No, it’s confidential for private companies.
• How should I prepare my cap table for audits?: Ensure all equity issuances are verified with legal documents.