A cap table, short for capitalization table, is the record of who owns what percentage of a company: every founder, investor, and employee equity grant, and how each round of funding changes those percentages.
At formation, a cap table is simple: founders and maybe an early advisor or two. It gets complicated fast once SAFEs, convertible notes, an option pool, and multiple priced rounds stack on top of each other, each with its own conversion terms. A clean cap table shows not just today's ownership but what happens to it under different scenarios: the next round, an acquisition, a down round.
This is also where "fully diluted" ownership comes in. That's the real percentage once every outstanding SAFE, note, and unissued option-pool share is accounted for, not just the shares actually issued today. A founder who only tracks issued shares is usually looking at a number meaningfully higher than their real, fully diluted stake.
A messy cap table is one of the most common things that slows down a raise or an exit, because it's the first document real diligence asks for. Spreadsheet errors, unsigned option grants, and SAFEs nobody remembers the exact terms of turn a routine request into a multi-week scramble. A company raising $1.5M on an $8.5M pre-money valuation ends up at a $10M post-money valuation, with new investors owning 15%. Simple math, as long as the cap table underneath it is actually accurate.
Issued ownership counts only shares that exist today. Fully diluted ownership counts everything that could become shares: the whole option pool and every SAFE and note as if converted. Investors price rounds on the fully diluted number.
Post-money valuation is the pre-money valuation plus the new money. New investors own their investment divided by the post-money valuation, and everyone else is diluted by that much. If the round also creates or tops up an option pool, investors usually require it to be counted in the pre-money, which means the existing holders, not the new investors, absorb that dilution too.
It's the first thing diligence asks for, and errors in it are among the most common reasons a round or acquisition slows down.
Simplified: no existing SAFEs or notes. Each outstanding SAFE converts in the round too and dilutes everyone further.
It counts every share that exists plus every share that could exist: the full option pool, granted or not, and all SAFEs, notes, and warrants as if converted. Investors use it to price a round.
New investors own the investment divided by the post-money valuation. Everyone else's percentage shrinks by that share, and further if an option pool is created or expanded in the pre-money.
Usually the company, often in cap table software, with its lawyers and accountants keeping it in sync with board approvals, the stock ledger, and the 409A.
They should, as convertible securities with their cap and discount, even before they convert. Leaving them off makes ownership look higher than it really is.
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