Fundraising
What is a cap table?
Quick Answer
A cap table (capitalization table) is a spreadsheet or document that shows a company's equity ownership structure — who owns what percentage, including founders, investors, employees with options, and any convertible instruments.
Detailed Answer
A capitalization table tracks every equity holder in a company, from founding through IPO or acquisition. It's the definitive record of who owns what.
A cap table typically includes: - **Common Stock** — Held by founders and employees - **Preferred Stock** — Held by investors (each series: Seed, A, B, etc.) - **Stock Options** — Employee option pool (granted and ungranted) - **Convertible Instruments** — SAFEs, convertible notes (not yet converted) - **Warrants** — Rights to purchase shares at a set price
Key information per row: - Name of holder - Type of security - Number of shares - Ownership percentage (fully diluted) - Investment amount and price per share - Vesting schedule and cliff dates
Why it matters: - Determines payout in an exit (waterfall distribution) - Required for fundraising due diligence - Governs voting rights and board control - Needed for employee offer letters (percentage context)
Best practices: Keep your cap table clean and updated in real-time. Use dedicated cap table software (Carta, Pulley, AngelList) rather than spreadsheets for anything beyond seed stage.
Related Questions
What is dilution in startup funding?
Dilution is the reduction in an existing shareholder's ownership percentage when a company issues new shares, typically during fundraising rounds. Founders typically experience 15-25% dilution per funding round.
How much equity should you give investors?
Standard dilution is 15-25% per funding round. Seed rounds typically sell 15-20% equity, Series A sells 20-30%. Founders should retain at least 50% through Series A to maintain control and motivation.
What is the difference between pre-money and post-money valuation?
Pre-money valuation is a company's value before new investment; post-money is the value after. Post-Money = Pre-Money + Investment Amount. A $10M pre-money with $2M invested = $12M post-money, giving the investor 16.7% ownership.
What should be in a startup pitch deck?
A VC pitch deck should be 10-15 slides covering: problem, solution, market size, business model, traction, team, competition, financials, the ask, and use of funds. Keep it visual, concise, and story-driven.
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