Cap Table Basics for Founders: What Belongs in It and What Doesn't

"How big is your cap table?" is one of the first questions every investor asks. It's also the document most likely to be wrong. Founders send a spreadsheet, the tab labeled "Cap Table" mixes issued shares with options that aren't granted yet, SAFEs that haven't converted, and a verbal commitment to a founder's college roommate. None of those are the same thing, and a cap table that treats them as the same thing creates problems that surface at the worst possible moment.

This guide covers what belongs on a cap table for a private company, what doesn't, and the conventions that keep founders out of trouble when they raise their first priced round. The principles are jurisdiction-portable; the terminology varies, and we'll flag the most common parallels as we go.

What a cap table is (and isn't)

A cap table is a summary view of ownership. It answers, at a chosen point in time and under a chosen set of assumptions, who owns what percentage of the company.

Two things are worth being clear about at the start.

A cap table is not the controlling record of ownership. The stock ledger (or share register, depending on jurisdiction) is the controlling record. The cap table is a calculated view of the ledger plus other instruments (SAFEs, options, warrants) that have not yet converted into shares. If the cap table and the ledger disagree, the ledger is the legal record. The cap table is a derived report. More on the stock ledger here.

A cap table is not a forecast. It's a snapshot of what exists today, occasionally paired with a separate scenario that models what a future round would look like. The two should never live in one tab. Confusing a snapshot with a forecast is the most common reason a cap table is wrong.

What belongs on a cap table

A clean cap table for a private company has, at minimum, the following line items, each tied to an authorizing document:

• Common stock outstanding (ordinary shares, in the UK and most Commonwealth jurisdictions). Every share that has been issued and not cancelled, by holder. Founders, employees who have exercised options, and any direct common issuances.
• Preferred stock outstanding, by series (preference shares, in the UK and most Commonwealth jurisdictions). Series Seed, Series A, Series B, or jurisdiction-equivalent class structure, each as its own block, with original purchase price, liquidation preference, and conversion ratio recorded.
• Options granted, by plan and by grant. Both vested and unvested, with strike price, grant date, and vesting status. Unexercised options are not shares yet, but they sit on the fully-diluted view.
• Option pool available. The unallocated portion of the equity incentive plan. Investors will ask for the size of the pool and how much is still ungranted.
• SAFEs, convertible notes, and equivalent instruments outstanding. The SAFE originated in the US, but jurisdiction-adapted versions are now standard globally (UK Advance Subscription Agreements, convertible loan notes, and similar). Record each instrument by holder, with the valuation cap, discount, MFN clause if present, and the principal amount. None are shares until they convert; the cap table shows them in a separate category with an estimated as-converted impact.
• Warrants outstanding. Bank warrants, investor warrants, advisor warrants. Each with strike, expiration, and underlying share count.

Three views typically appear on a complete cap table:

1. Outstanding shares. Only common (ordinary) and preferred (preference) shares that have actually been issued. This is what the register shows.
2. As-converted to common. Outstanding shares with preferred converted to common at their conversion ratio. This controls a vote on most matters.
3. Fully-diluted. Outstanding plus all options (granted and ungranted in the pool) plus SAFE and note conversions plus warrant exercises. This controls the percentage discussion at a financing.

A cap table that shows only one of these views is incomplete. A cap table that doesn't label which view it's showing is misleading.

What doesn't belong on a cap table

The reverse list is where founders get into trouble.

• Anything verbal. "Pat is getting 1% when we close the round" does not go on the cap table. A signed offer letter with a board-approved grant does. Until the grant is approved and the option agreement is signed, the equity does not exist.
• "Founder shares we'll formalize later." If shares haven't been authorized by the board, issued at a price, and reflected on the stock ledger, they are not shares. They're an intention. A cap table that lists unissued founder equity creates a paper position that doesn't exist legally, and that position has to be unwound during diligence.
• Discussion-stage equity. Term sheets, draft option grants, and equity offered to candidates who haven't accepted. These belong in a separate pipeline document, not on the cap table.
• Side letters and shadow agreements. If an early investor has a side letter granting additional rights or shares, those rights must be reflected on the cap table or formally documented elsewhere. A side letter sitting in an inbox is a problem waiting to surface.
• Forecasted dilution from a future round. Modeled scenarios are useful and belong in a scenario tool, not the live cap table. Mixing the two means no one knows which document reflects the actual position.

Pre-money vs. post-money

When a financing closes, the cap table snaps from "pre-money" (before the new shares are issued and SAFEs convert) to "post-money" (after). Most cap-table errors at financing happen in the conversion between the two:

• SAFEs convert based on the round price and their cap or discount, and the order of operations matters when multiple SAFEs are stacked.
• The option pool is usually expanded as part of the round; whether the expansion is pre-money or post-money has a real effect on founder dilution.
• New investors' shares are issued at the priced-round price; SAFE-converted shares are typically issued at a lower price (the cap or the discount).

A clean cap table keeps both views available and records the round mechanics explicitly. A messy one has founders, counsel, and investors all calculating from different versions of the same document.

Fully-diluted is a discipline, not a number

Founders often talk about "owning 60% fully diluted." Investors do too. The number is meaningful only if the underlying instruments are tracked correctly. Common errors:

• Options granted in informal one-pagers but never approved by the board. Either disputable or not yet equity.
• An option pool defined in the equity incentive plan but never adopted by the board. Same problem.
• SAFEs without a clearly recorded valuation cap, discount, and MFN clause. The conversion math doesn't work without all three.
• Warrants from a bank facility that no one tracks because they expire in five years. They still count fully-diluted today.

If any of these are missing or wrong, the fully-diluted number is wrong. Investors notice quickly.

The cap table is downstream of the register

The most defensible setup is the one described in the stock ledger guide: maintain the stock ledger as the source of truth, and build the cap table as a live view that derives from it. Issuances, transfers, and cancellations flow through the ledger. Options, SAFEs, and warrants are tracked as separate instruments that join the cap-table view but don't sit on the ledger until they convert into shares.

This is what Octelligence's cap-table tooling is built around: every share on the cap table traces back to a board-approved issuance on the register, every SAFE traces back to a signed instrument, and the conversion math at the next round is recorded, not estimated.

The bottom line

A cap table is a summary, not a source of truth. It records what's been issued, granted, and signed. It does not record intentions, verbal commitments, or forecasts. The discipline that keeps it clean is the same discipline that keeps the underlying register clean: every line traces to an authorizing document, the views are labeled, and the modeling lives somewhere else.

The cap table founders show their first investor sets the standard for every later round. Setting it up correctly once is cheaper than reconciling it under diligence pressure two years later.