Cap Table Template

In plain language: Lists every equity holder by full legal name or entity name, their role (founder, investor, employee), and their contact or registration details.

Common mistake: Listing a founder's personal name when shares are held through a holding company — the cap table must match the share register exactly, or transfer restrictions and tax elections may be invalidated.

In plain language: Identifies the class of security each holder owns — common stock, Series A preferred, options, warrants, SAFEs, or convertible notes — and the rights attached to each class.

Common mistake: Lumping all preferred shares into one class without noting sub-series. Series A and Series B preferred often carry different liquidation preferences — treating them identically produces a wrong waterfall.

In plain language: Records the total shares authorized by the company's articles, the shares actually issued to date, and the shares reserved but unissued (option pool, warrants).

Common mistake: Forgetting to include the unissued option pool in the fully diluted share count. This understates dilution for founders and existing shareholders and produces an inflated ownership percentage.

In plain language: Records the price per share paid by each investor and the date of issuance, establishing the cost basis used for capital gains calculations and preference waterfall modeling.

Common mistake: Omitting the issue date for founder shares. The date triggers the start of capital gains holding periods and determines whether a Section 83(b) election is still available in the US.

In plain language: Calculates each holder's percentage on two bases: basic (issued shares only) and fully diluted (all shares including options, warrants, and convertibles).

Common mistake: Presenting only basic ownership to investors. Preferred investors always evaluate on a fully diluted basis — showing only basic percentages looks either naive or intentionally misleading.

In plain language: Specifies the vesting timeline for each founder or employee grant — total duration, cliff date, and monthly vesting cadence — along with any acceleration triggers.

Common mistake: Not recording vesting details in the cap table at all and relying only on a separate grant agreement. If the grant agreement is lost, the cap table has no basis for a vesting dispute.

In plain language: Documents all outstanding SAFEs, convertible notes, and warrants, including principal, interest rate (if any), valuation cap, discount rate, and the trigger event for conversion.

Common mistake: Treating convertible notes as debt on the balance sheet and omitting them from the cap table. Until they convert, they are potential equity — excluding them makes the fully diluted count materially wrong.

In plain language: Lists each individual option grant — grantee, grant date, exercise price, number of options, vesting schedule, and status (outstanding, exercised, or forfeited).

Common mistake: Using a stale 409A valuation as the exercise price for new grants after a material funding round. This creates a tax compliance risk under IRC Section 409A — new grants after a material event require a refreshed appraisal.

In plain language: Models the order and amount each share class receives upon a liquidity event — acquisition, IPO, or dissolution — at multiple hypothetical exit valuations.

Common mistake: Running the waterfall using fully diluted share counts for the common distribution before checking whether preferred holders have elected to participate. Participating preferred draws twice from the same exit pool.

In plain language: States the governing documents that control each security class — shareholder agreement, subscription agreement, option plan rules — and cross-references them to the cap table entry.

Common mistake: Updating the cap table after a new financing without also updating the cross-referenced governing documents — or vice versa. Inconsistencies between the cap table and underlying agreements create disputes during due diligence.

A cap table, short for capitalization table, is a legal document that records the equity ownership structure of a company. It lists every shareholder and security holder — founders, investors, employees with options, and holders of convertible instruments — along with the type of security they hold, the number of shares or units, and the resulting ownership percentage on both a basic and fully diluted basis. It is the authoritative reference for who owns what in a private company.

Any company that has issued equity to more than one person needs a cap table. In practice, every incorporated startup should create one on day one when founder shares are issued. Investors, lenders, acquirers, and tax authorities all request a current cap table as part of standard due diligence. Companies that delay building one often discover capitalization errors — misallocated shares, missing option grants, unrecorded convertible notes — that require expensive legal correction before a deal can close.

Basic ownership is calculated using only the shares currently issued and outstanding. Fully diluted ownership adds all securities that could convert into shares in the future — stock options (vested and unvested), warrants, SAFEs, and convertible notes — to the denominator. Investors always evaluate ownership on a fully diluted basis because that is what their stake will look like after all conversion events occur. A founder who shows only basic ownership percentages will appear uninformed to sophisticated investors.

Update the cap table immediately after every equity event: issuing new shares, closing a funding round, granting or canceling options, converting a SAFE or note, processing a transfer, or completing a stock split. At minimum, reconcile the cap table against the share register quarterly. An out-of-date cap table discovered in due diligence is one of the most common causes of deal delays and price reductions in acquisitions and venture financings.

An option pool is a block of shares reserved in the cap table for future grants to employees, advisors, and consultants. It is typically sized at 10–20% of fully diluted shares, and investors often require it to be created — and included in the pre-money share count — before closing a financing round. Including the option pool in the pre-money denominator dilutes the founders' percentage before the investor's money even arrives, which is why option pool sizing is a heavily negotiated term in term sheets.

A SAFE (Simple Agreement for Future Equity) is recorded on the cap table as a convertible instrument with its principal amount, valuation cap, discount rate, and issuance date. Until it converts, it does not yet represent issued shares — but it must be included in the fully diluted share count modeled at its conversion price. When a qualified financing triggers conversion, the SAFE is replaced with the actual number of preferred shares issued at the converted price.

A template is sufficient for a simple two-founder company with no external investors or options. Legal review is strongly recommended — and in practice essential — before closing any financing round, granting options above a nominal amount, or entering due diligence for a sale or merger. Corporate attorneys typically charge $400–$800 to review and reconcile a cap table against the underlying share register and governing documents, which is far less expensive than correcting a capitalization defect discovered mid-transaction.

A liquidation waterfall is a model — often built into the cap table — that shows how exit proceeds are distributed among shareholders in priority order at various hypothetical exit valuations. Preferred shareholders with liquidation preferences receive their multiple first, then participating preferred holders draw again from residual proceeds, and common shareholders receive whatever remains. The waterfall matters because it determines whether founders and employees receive meaningful proceeds from a sale, and it is a primary driver of investor and founder negotiation over preference terms.

A 409A valuation is an independent appraisal of a private company's common stock fair market value, required by US tax law before stock options can be granted at a compliant strike price. If options are granted below fair market value, employees face ordinary income tax plus a 20% penalty at exercise under IRC Section 409A. The cap table must reflect the 409A-derived exercise price for each option grant, and a fresh appraisal is required after any material event — a new funding round, a significant revenue milestone, or an acquisition offer.

A new funding round adds a new security class (e.g., Series A Preferred), new shareholder rows for incoming investors, and often triggers conversion of outstanding SAFEs and convertible notes into shares. The pre-money share count — including any new option pool created at the investor's request — establishes the price per share, and post-money ownership percentages are recalculated for every existing holder. Founders routinely lose 15–30% of their basic ownership percentage in a typical seed-to-Series-A transition when option pool and investor shares are added.