Cap table

What a cap table records

A cap table summarizes the corporation's capital structure on a single sheet. A typical cap table includes:

• Issued shares by class (common, preferred, Series A, Series B), by holder, with certificate numbers
• Stock options outstanding, with strike prices and vesting schedules
• Warrants outstanding, with exercise prices and expiry dates
• Convertible instruments (SAFEs, convertible notes), with valuation caps, discount rates, and conversion mechanics
• Unissued option pool reserved under the equity incentive plan
• Fully diluted percentages for each holder, calculated as if every option, warrant, and convertible has been exercised or converted

Cap table versus share register

The cap table and the share register answer different questions. The share register answers: who legally owns the issued shares of the corporation, as of today? The cap table answers: who has, or could have, an economic interest in the corporation if all outstanding equity instruments were exercised?

The register is statutory; the cap table is operational. When they disagree on issued shares, the register controls. The cap table should always be built from the register, not maintained in parallel to it, because parallel maintenance is how the two diverge. A cap table that doesn't agree with the register is a sign that the underlying records have drifted.

Why fully diluted matters

"Fully diluted" is the standard frame for negotiating equity in private corporations. When a term sheet quotes a 20% ownership stake for a new investor, that figure almost always assumes every option in the pool has been granted and exercised, every warrant has been exercised, and every SAFE has converted. Less conservative views (basic, on a current-shares-issued basis) overstate the founder team's residual ownership and understate dilution.

For employee equity grants, the same convention applies: a 0.5% grant is 0.5% of fully diluted, not of currently issued shares.

Scenario modeling

Beyond the snapshot, the cap table is the tool used to model what happens next: what does a $5M priced round at a $25M post-money valuation do to existing holders? How does an option pool top-up before the round shift the dilution? What does a SAFE conversion at a $10M cap look like compared to a $15M cap? These are scenario questions, and a cap table maintained in a spreadsheet rarely answers them without errors, because the underlying conversions are mechanically intricate (especially for post-money SAFEs and stacked SAFE rounds).