Cap Table for Startups

What Is a Cap Table?

A capitalisation table — cap table — is a register of a company's equity ownership. It lists every shareholder, the number of shares or units they hold, the class of shares (common, preferred, etc.), and the percentage of the company they own. For a startup, the cap table also tracks outstanding instruments that will convert into equity in the future — SAFEs, convertible notes, and options.

A cap table is usually presented on two bases: as‑issued (current ownership based on shares already issued) and fully diluted (ownership assuming all outstanding instruments convert into equity). The fully diluted view is what investors care about because it shows what their ownership will be after the round closes and all instruments have converted.

What a Cap Table Must Include

An institutional‑grade cap table goes beyond a simple list of shareholders. It must track:

• Shareholder names and entity types: Founders, employees, angel investors, and institutional investors, each with their legal entity name and jurisdiction if applicable.
• Share class: Common stock (founders, employees), preferred stock (investors), and any sub‑classes with different rights (Series Seed preferred, Series A preferred). Each class has different liquidation preferences, voting rights, and anti‑dilution protections.
• Number of shares or units: Exact number held, including the price paid and the date of issuance. This is the source of truth for every future calculation.
• Percentage ownership: Both on an as‑issued basis and a fully diluted basis. Founders often underestimate dilution because they look only at as‑issued percentages.
• Outstanding convertible instruments: Every SAFE, convertible note, and warrant must be listed with its terms — valuation cap, discount rate, maturity date, and conversion mechanics. Each must be modelled at its conversion price under both the cap and the discount scenario.
• Option pool: The number of options granted, the number available for future grants, the strike prices, and the vesting schedules. The option pool expansion required by a new investor is a key negotiation point.
• Waterfall analysis: A schedule showing how proceeds would be distributed to each shareholder class under different exit values and liquidation preferences. This is required for any company that has issued preferred stock.

Why the Cap Table Matters for Fundraising

Investors examine the cap table before they examine the financial model. A messy cap table — one with undocumented share issuances, unresolved founder departures, or SAFEs that have not been modelled — signals legal risk. Investors will either demand that the cap table be cleaned up before they proceed, or they will price that risk into the valuation.

A clean, fully diluted cap table allows the founder and the investor to have an informed negotiation. It shows exactly how much dilution the current round will cause, how previous investors are protected, and what the founder's economic interest will be after the round closes. Without it, both sides are negotiating in the dark.

Common Cap Table Mistakes

• Not maintaining the cap table from day one: Reconstructing two years of equity issuances from emails and memory is expensive and error‑prone. A cap table should be updated every time equity moves.
• Forgetting to model SAFEs at both conversion prices: A SAFE with a $5 million cap and a 20% discount converts at the lower of the two prices. The cap table must show both scenarios and their dilution impact.
• Ignoring the option pool expansion: Series A investors typically require a 10–15% option pool pre‑money. This dilution comes entirely from the existing shareholders, not the new investor. Founders who do not model this before the term sheet arrives are often surprised.
• Treating the cap table as a separate document: The cap table must connect to the financial model. When the model changes — a lower revenue projection, a longer runway requirement — the raise amount changes, which changes dilution. An isolated cap table gives a false picture.

How Oakworth Builds Cap Tables

Every Oakworth engagement includes a fully diluted cap table that is integrated with the financial model. The cap table is built from the company's existing records — however incomplete — and modelled forward to show the impact of the current fundraise. SAFEs and notes are modelled at both conversion prices. The waterfall analysis shows exit proceeds under ten or more scenarios. The output is a cap table that can be placed directly into the legal documentation for the round.

Related Pages

• Investor‑Ready Financial Model
• Financial Model for Fundraising
• Startup Fundraising Strategy
• Financial Modeling and Valuation
• Financial Modeling Services