Software Growth

Cap table (capitalization table)

A cap table lists every owner of a company, what securities they hold, and what percentage each owns, including options, SAFEs and convertible notes.

A cap table (capitalization table) is the record of who owns your company. It is a list of all the securities your company has issued and who owns them: stock, options, warrants, convertible notes. When you are the only founder it is one line. By the time you raise money, hire with equity and issue a few SAFEs, it is the document everything else depends on.

What it contains

  • Each holder: founders, employees, advisors, investors.
  • The type of security: common stock, preferred stock, options, SAFEs, convertible notes, warrants.
  • Share counts, price paid, grant dates, and vesting terms.
  • The unissued option pool (shares set aside for future hires).

How to read ownership

Ownership is usually quoted on a fully diluted basis, which counts issued shares, outstanding options and warrants, the reserved pool, and SAFEs and convertible notes as if they had converted.

Example: two founders hold 4,000,000 shares each, the option pool reserves 1,000,000, and a seed investor buys 1,000,000. Fully diluted shares are 10,000,000. Each founder owns 4,000,000 / 10,000,000 = 40 percent, the pool is 10 percent and the investor is 10 percent.

Why it matters

You use it to model dilution before accepting terms. Investors review it during due diligence; Carta notes that investors expect a clean one and that a messy table slows deals and can kill them. Acquirers review it too. Problems that surface late include missing signed grant paperwork, verbal equity promises, and founder shares with no vesting.

Common mistakes

  • Tracking it in a spreadsheet nobody updates after each grant.
  • Forgetting that SAFEs and notes will convert, so today's percentages overstate your ownership.
  • Issuing options before a 409A valuation sets the exercise price.
  • Giving equity to contractors or advisors informally.

For bootstrapped founders

Even if you never raise, keep a table. It matters the day you add a co-founder, give an early hire equity, or sell the business. A spreadsheet is fine at that point; dedicated tools help once you have many holders. This is general information, not legal advice.

Sources

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