A cap table, short for capitalization table, is simply the record of who owns what in a company. It lists every owner — founders, investors, and people holding stock options — and how much of the company each one holds.
Early on it can be a single spreadsheet. As a company grows, it becomes the authoritative source of truth for ownership, and getting it right matters enormously.
What a cap table contains
- Each founder and their share count or ownership percentage.
- Investors and the equity they received for their money.
- The option pool — equity set aside for future employees.
- How each person's stake changes as new shares are issued.
Why it changes over time
A cap table is not static. Every time the company raises money or grants equity, ownership percentages shift. This is dilution: as new shares are created and given to investors or employees, each existing owner's slice of the company gets smaller, even though the company as a whole is usually becoming more valuable.
A smaller slice of a much larger pie is the normal, healthy path of a growing startup. The cap table is how you watch that happen.
Before incorporation: the intended cap table
Before a company exists, there are no shares and no formal cap table. But the founders' intended equity split is effectively the first draft of one. Recording that intended split clearly — alongside vesting terms — means that when the company is incorporated and the real cap table is created, it simply formalises what the founders already agreed.
This is why a clear founder agreement matters: it captures the intended ownership before any shares exist, so the eventual cap table reflects a deliberate decision rather than a rushed one.