What is a cap table? Definition, how it works and examples
Who owns what, and in which order they are paid: how to read a capitalization table, and what it tells an investor that the valuation headline does not.
The short answer
A cap table, explained in one sentence, is a company’s capitalization table: the ledger of every shareholder, share class, option, warrant and convertible instrument, showing how many shares each holds and what percentage of the company that amounts to — before and after each funding round. Two things on it decide what a stake is worth, and the headline valuation shows neither. The percentage depends on which shares are counted in the denominator. The payout depends on the class of share, because preferred stock is paid before common in a sale.
What does a cap table mean in finance, in a startup and in VC?
The cap table meaning shifts with the reader. In finance generally, a company’s capitalization is the mix of equity and debt that funds it, and the table is the equity half written out holder by holder. In a startup, it is the working record of who owns what, usually kept in equity-management software. In venture capital, the cap table meaning is narrower and more practical: it is the model a round is negotiated on.
Cap table explanation: one company from founding to Series A
The clearest cap table explanation is to watch one change. Below, two founders start with 8,000,000 shares of common stock and reserve 2,000,000 for an employee option pool. A seed round raises $2M at an $8M pre-money valuation: $0.80 a share, 2,500,000 new seed preferred shares. A Series A then raises $10.5M at a $31.5M pre-money valuation — on the condition, as Series A term sheets usually set, that the option pool is first topped up to 15% of the company after the round. Read the Series A column twice.
Why ownership is not the same as proceeds: the preference stack
Preferred stock is what investors buy in a priced round. Its usual protection is a 1× non-participating liquidation preference: in a sale, each preferred holder takes the greater of its money back or what it would receive by converting to common. Common stock — founders, employees, option holders — is paid only from what is left. The order among the preferred classes is set in the charter: “standard” seniority pays the latest round first, “pari passu” pays all series side by side.
What an SPV investor should read in a cap table
When you invest through a single-deal vehicle, the vehicle — not you — is on the company’s register. The SPV appears on the cap table as one holder of record with one line: its class and its number of shares. Behind that line sit all of the vehicle’s investors, each owning a share of the vehicle in proportion to what they put in. The mechanics are set out in what an SPV is and SPV investing. A private company’s full cap table is usually confidential, so read what the deal documents disclose for these points: The class Common or a series of preferred.
The rules behind a cap table, as of October 2026
Options on the pool line are granted at a strike price set by an independent appraisal of the common stock — see 409A valuation for why that price sits below the last preferred round.
Cap table analysis: a summary and the common mistakes
A cap table summary in one line: who holds what class, on which denominator, with how much preference above you. Cap table analysis is checking all three before trusting a percentage. The common mistakes skip one: Quoting a percentage without its denominator The bases differ by eight points in the example above. Reading ownership as a share of proceeds Below the last round’s price, the stack decides. A 45% holder can receive 12%. Leaving out unconverted SAFEs and notes They become shares at the next priced round.
The terms this page uses
Cap table (capitalization table) The ledger of every shareholder, class, option and convertible in a company, with share counts and percentages. In a round, the model the price is negotiated on. Fully diluted A share count that includes everything that could become a share — issued stock, granted options, the unallocated pool, warrants and convertibles. The basis most rounds are priced on. Preferred stock The class investors buy in a priced round. Carries a liquidation preference and conversion rights, as the certificate of incorporation states.
Questions about cap tables
What is a cap table, in plain terms? It is the list of who owns a company and how much: every shareholder and class of share, plus options and convertibles that could become shares, with the percentage each represents. Every funding round produces a new version of it. What does fully diluted mean on a cap table? It means the percentage is calculated over every share that exists or could exist — issued shares, granted options, the unallocated pool, warrants and convertibles. It gives the lowest percentage of the possible bases, which is why rounds are priced on it.
What is a cap table, in plain terms?
It is the list of who owns a company and how much: every shareholder and class of share, plus options and convertibles that could become shares, with the percentage each represents. Every funding round produces a new version of it.
What does fully diluted mean on a cap table?
It means the percentage is calculated over every share that exists or could exist — issued shares, granted options, the unallocated pool, warrants and convertibles. It gives the lowest percentage of the possible bases, which is why rounds are priced on it.
Will I see the cap table if I invest through an SPV?
Usually not in full. A private company’s cap table is generally confidential, and the vehicle — not you — is the holder of record. The deal documents state what matters to you: the class the vehicle holds, the number of shares and the price it paid.
Why does my percentage fall when the company raises money?
Because the company issues new shares and your count stays the same. That is share dilution. If the new shares are sold at a higher price than you paid, a smaller percentage can still be worth more than before.
Where the rules on this page come from
Rules were last verified against the primary text on 1 October 2026. The cap table examples are illustrative and describe no real company; US federal and Delaware rules are cited, and other jurisdictions differ. What “accredited” means in the 500-holder test is set out in accredited investor, and in the SEC’s own summary.