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.

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 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 issued 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: Usually issued to investors during funding rounds.
• Stock options: The right for an employee to buy a set number of shares at a fixed price in the future.
• Restricted stock: Shares granted to employees that are subject to vesting and other restrictions.
• Warrants: Often granted to investors, lenders, or partners as an incentive.
• Convertible instruments: Investments that turn into equity at a later date.

Share classes

Different types of equity are organized into share classes; each class can have different rights. The important distinction for a startup founder is between common and preferred shares.

Transaction history

This section tracks every event that changes who owns what on your cap table, important for valuations audits and due diligence. Examples of transactions include funding rounds where new shares are issued and stock grants.

Valuations

Tracking monetary value for shares over time is key for both investors and employees. Types of valuations might include:

• Pre-money valuation: Value of the company before a new funding round.
• Post-money valuation: Value after the funding round.
• 409A valuation: Independent appraisal of a private company’s fair market value.

Dilution analysis

When issuing new shares, ownership percentage of existing shareholders decreases. Dilution analysis helps show impacts of new shares on owners and allows strategic management of fundraising and hiring.

Exit scenarios

Using a cap table for modeling exit scenarios involves running a waterfall analysis, showing payments from a sale or IPO based on preferences and rights of each share class.

Common formats

Choosing the right format for a cap table depends on the company’s needs. Early-stage startups often use simple spreadsheets, but as companies grow, dedicated software becomes necessary for accuracy and scenario modeling.

How to create a cap table

Creating a cap table involves compiling and organizing existing equity ownership information into a structured format. Best practices for execution involve:

1. Initial setup: Gather all current equity and ownership information, ensuring accuracy for future management.
2. Add founders’ equity: Document initial equity splits among founders, including percentage ownership and any applicable vesting schedules.
3. Add investor equity: Record investments by angels or through funding rounds, noting share prices and terms.
4. Add an option pool: Reserve shares for future employees, signaling growth through equity compensation.

Cap table management best practices

Regular management is crucial to avoid costly errors and maintain compliance:

1. Maintain accurate records: Create a single source of truth to eliminate confusion and errors.
2. Use an organized format: Ensure clarity in how information is presented to stakeholders.
3. Update regularly: Keep the cap table current with real-time changes.
4. Plan for dilution: Use modeling to forecast impacts on ownership and size option pools appropriately.
5. Ensure compliance: Follow tax and legal regulations diligently.

Frequently asked questions about cap tables

How do I create a cap table? Start listing shareholders and their ownership details, organized into a table. Update it for changes over time.

Can an LLC have a cap table? Yes, LLCs have similar needs for tracking ownership.

Is a cap table a public document? No, it's confidential, shared only with key stakeholders.

What is the impact of issuing stock options on cap table ownership? It increases the diluted share count, influencing existing shareholders' percentages when exercised.