The Founder's Guide to Understanding Your Cap Table

Your cap table is the single most important financial document in your company. It determines who owns what, who gets paid in an exit, and how much control you have over your own business. Yet most first-time founders don't truly understand theirs until it's too late.

This guide explains everything you need to know.

What Is a Cap Table?

A capitalization table is a document that tracks every equity holder in your company. It shows who owns shares, what type of shares they hold, and what percentage of the company each person owns on a fully diluted basis.

Fully diluted means counting all shares that exist or could exist — including unexercised stock options, unconverted SAFEs, and warrants.

Who's on the Cap Table?

A typical seed-stage cap table includes:

• Founders — Common stock, subject to vesting
• Employees — Stock options from the option pool
• Seed investors — Preferred stock (or SAFEs that will convert)
• Advisors — Usually 0.25-1% in options
• Option pool — Reserved but ungranted shares for future hires

By Series A, you might also have:

• Series A investors — Preferred stock with different rights
• Converted SAFE/note holders — Now preferred stock
• More employees — With vested and unvested options

How Dilution Works Across Rounds

Let's trace a founder's ownership through three rounds:

At founding: Two co-founders split 100% equally → 50% each

After seed ($2M at $10M post-money): Investors get 20%. Option pool of 10% created. Founders: 50% × 0.70 = 35% each.

After Series A ($10M at $50M post-money): Investors get 20%. Option pool topped to 15%. Founders: 35% × 0.65 = ~23% each.

After Series B ($25M at $150M post-money): Investors get 17%. Founders: 23% × 0.83 = ~19% each.

From 50% to 19% in three rounds. But 19% of a $150M company ($28.5M) is worth far more than 50% of a $0 company.