A guide to understanding startup capitalization table/cap table

The capitalization or cap table reflects the ownership of all the shareholders of a company — that includes the founder, investors, and employees with exercised options.

Equitylist Team

November 11, 2022

Table of Contents

A capitalization table or cap table is mostly used by startups, early-stage businesses, and private companies to record the company’s shareholders’ ownership pattern.

In short, it’s a document in a table/sheet format that shows the breakdown of the company’s shares, who owns the shares, how many, and other details related to the company’s equity capital.

A startup cap table is an important reference document, not only for the business owners, but also for other stakeholders such as investors and employees. The capitalization table is a crucial document and hence, it is important that the cap table is accurate, tailored to the specific business/organization, and is always updated.

If you’re a startup or a business getting started with your capitalization table, this is the A-Z guide you need. Here you'll learn about what is a cap table, why it is required, who needs it, what it can do for your business, how to create a capitalization table, and cap table examples for your reference.

What is a cap table?

A cap table is a summary of the stock ownership of a company’s shareholders. It provides an analysis of a company’s percentages of ownership, equity dilution, and value of equity in each round of investment by founders, investors, and other owners. It is the document that holds information about the capital structure in a more easy-to-understand manner that can be referred to when making executive-level decisions.

cap table
Ownership breakdown of a company as an example

How does having a cap table help?

A cap table is a summary of your company’s stock holdings. In general, it helps you track the important changes to your shareholders over time. This information from the cap table helps make executive-level decisions. Let’s get into the details of the ways in which cap tables help.

Keep track of your company equity

It’s important to have accurate information about your startup equity ownership. While maintaining proper records of it is easier in the initial stages, it can get complicated with time.

Initially, most startups have a few founders/owners. As companies expand with new investors and more employees, tracking equity can get challenging.

That’s why having a capitalization table helps. Having a proper cap table can help you keep track of equity, shareowners, investors, and all the stakeholders.

It saves time

Information related to equity can get complicated if not tracked accurately from the beginning. And later, when this information is required, it may be too time-consuming to put it all together. Moreover, it can be a costly affair, as it requires expert resources to conduct this task.

That is why, well-maintained startup cap tables can help save time at important junctures in the company’s journey. For example, at the time when your company is pitching to new investors, or when the company is about to get acquired/sold, when you’re hiring employees, etc.

It acts as a legal document

A startup cap table can function as a legal document. It’s a critical document that holds the information of your equity ownership. In many countries, such as the United States, it can be used as a legal document to show equity ownership.

More importantly, to be able to use the cap table as a legal document, it’s necessary to keep it updated and accurate so that it reflects the correct ownership at any given time. Keeping it updated can help avoid mistakes.

Read more about cap table management and how to do it right.

Who needs a cap table?

While the cap table may be initially created by startup founders and business owners, it’s a document that is used by many other stakeholders for reference. Let’s understand who uses capitalization and for what purpose.


The capitalization table is one of the most important documents for startups. Usually, startups have a small number of equity owners in the beginning. For example, family members, friends, and angel investors.

As the company raises capital and grows, it may add new investors, such as venture capitalists, and it becomes important to keep a track of these details.

The startup cap table gets updated during each round of funding as company ownership becomes more complex with its growth.

One critical use case of the cap table is when startups want to invite new investors, they can use the cap table to determine how much percentage of the company ownership they would give to the new investors for their investment.

For example, startups might enter into new agreements with investors, and that might change their liquidation preferences. Or, it could change how much the founder owns and controls. All this information can become hard to understand if not updated in the cap table.

Without the cap table, the owner might end up giving away a lot of shares of the company and be left with less. Or, if the company is being sold/acquired by another company, the cap table can give an overall glimpse of the company’s ownership.


The cap table is what gives all this crucial information to investors. A cap table with transparent and accurate reporting of the equity ownership is vital as it enables investors to calculate their ownership percentage in the company post-investment, which helps extrapolate investment outcomes at the time of liquidity events. Investors can also assess the latest shareholding patterns of the company through a cap table.

What does a cap table include?

A cap table includes all the information pertaining to your company’s shares – authorized shares, outstanding shares, shareholder names, and how many shares are owned by each shareholder, among other details.

In the sections below, we’re also including screenshots of how the details appear on EquityList that help startups create and manage their cap tables.


The valuation of a company includes pre and post-money valuation. Pre-money valuation is what a company is worth without any external funding or prior to a round that the startup is actively raising. It is the valuation shared with potential investors to showcase the current worth of the company. On the other hand, post-money valuation is what a company is worth after they have successfully raised a round of funding.

post money valuation
valuation in startup cap table
Historical view of a company's valuation increase on EquityList

Total number of authorized shares

These are shares that a company is allowed to issue to investors. This number is pre-defined when the company is incorporated.

authorised shares in a company
Breaking down share allocation for your company on EquityList

Total number of outstanding shares

Outstanding shares are the shares that are issued to investors from the authorized shares. This information is critical to mention and update in a cap table.

Reserved shares

Reserved shares are authorized shares that are set aside to be issued in the future. This information can help get an understanding of the amount of shares/equity that is available for issuance.

Shareholder name as it appears on the security

A cap table must have the names of all the shareholders as they appear on the securities. Shareholders are the individuals who own shares of a company and have rights and benefits of ownership.

Date of issuance

A startup capitalization table must include details about the date of issuance of the shares. This information must be updated as and when there are new equity shareholders.

The number of shares or units issued

Another important detail that is a must to have in the cap table is the total number of shares issued to investors.

Reserved shares

Similar to issued shares, a cap table also mentions the shares that are reserved for someone; for example, ESOP pool or employee stocks that have been vested or are in the process of vesting.

Common stock

The cap table represents types of share classes issued across to different shareholders.

Preferred shares held

Preferred shares are stocks that have special, different privileges and rights from common stocks. There are different types of preferred shares, such as convertible, participating, non-participating, etc. A cap table must mention the number of preferred shares held by the initial founders of the company and who holds how many shares.

How to use a cap table?

By now, you might have a fair bit of understanding of what is a cap table, who can use it, and a little bit about how it can help. Now, let’s understand a bit more about how to use a cap table.

To understand your equity

A startup capitalization table holds all the important details about your company’s equity ownership. The table can give you a bird's eye view of your company equity – how many shares are issued, to whom, how many more can be issued, when, and against what conversion ratio and liquidation preference, etc.

The cap table induces different types of variables, and hence it is important to always have a well-maintained cap table. It makes it easy to understand complex details about your equity. This is easier when you make use of a cap table management platform like EquityList.

fundraise modeling
Model your equity dilution using EquityList's simulator

To discuss the initial equity distributions

When your startup seeks new funding and investors, you can use your startup capitalization table to discuss/negotiate the equity distribution.

For example, investors want to position companies at a lower market value so that they can pay less and gain a larger part of companies. This is when the cap table comes into the picture to show the real market value of a company.

For managing employee options

In the beginning, most startups distribute their equity ownership among the founders. Later, as the number of employees increases and they start receiving equity, the cap table can be a useful reference to make these decisions. The capitalization table can show employees their positions in the company and associated details in a clear and transparent manner.

Using an ESOP management platform like EquityList here further streamlines the information and keeps everyone up-to-date. This makes managing employee options a lot more efficient and accurate.

For investors

When you’re raising funds for your startup, an accurate and up-to-date cap table is a key factor. It helps with investor negotiations. It can provide investors with your company’s existing capital structure and how their investment could impact the company, and decide how much they need to invest.

For you (founders), it helps to determine where new investors will fit in and how much percentage of the company’s shares investors should get from your company for the amount they’re investing.

For future planning

The cap table includes all kinds of information related to your company shares – current shareholders and investors, as well as important dates.

For example, the cap table will include all your warrants and convertible notes. This information can help you with crucial future planning for your company – whether you want to invite more investor funding, hire more people, give equity to employees, and other such important decisions of your company.

When selling the company

In the scenario when you want to sell your company, the cap table can help summarize which shareholder owns how much share of the company, and how the proceeds should be split among each shareholder.

To keep track of shareholders

A well-managed cap table can provide all the information about shareholders – past and current. How many shares are owed by each shareholder, the percentage of the company they have, etc. The cap table can also tell you when more shares will be issued to your shareholders.

For term sheet negotiation

A term sheet shows the basic terms and conditions of an investment. It is a preliminary document and not an agreement. A startup can use the cap table to evaluate if the terms of the investment make sense for their growth, business goals, and objectives, opening negotiations between investors and founders.

Examples of startup capitalization table
company cap table
Cap table managed on EquityList

How to create a cap table for your startup?

Before we get into the details of how to make a capitalization table, let’s talk about the most basic element of a cap table — the format. Cap tables are usually made in a sheet format using Microsoft Excel, Google Sheets, or any other type of spreadsheet.

However, sheets are not the best long-term solution. As your company grows and investments increase, it’s going to get more complicated to track your equity.  We recommend using a smart tool/software specially designed for cap tables.

Here are the steps to make your startup cap table:

To begin your cap table, fill out the basic information about your company. This would be information such as:

  • The names of the founders
  • The number of ordinary shares held by founders
  • The number of preferred shares held by founders
  • The total number of authorized shares
  • Number of outstanding shares
  • Unissued shares
  • Names of shareholders
  • The number of shares owned by each shareholder
  • Details about series financing
  • Options
  • Warrants
  • Convertible securities
  • Transfers

Fill in all your shareholders’ information

Next, add details about your shareholders. Your shareholders may include your company executives, employees, etc. You should have accurate information about all your shareholders. You can add all the information at once or update it as you go. This information should be updated as and when there’s a change or transfer of shares.

The names of your shareholders

  • The number of shares owned by each shareholder
  • Stock options owned by each shareholder
  • The dates shares were bought by shareholders
  • Price per share
shareholder structure - startup cap table
Maintain a system of record for your shareholders on EquityList

Add information about options or warrants

If your company has issued options or warrants, add the information to the cap table.

A warrant is a security that gives investors the right to purchase shares at a specific price and on a specific date. When you add this information to the cap table, you can determine if these instruments have been converted to shares or are fully vested.

  • Shareholder names
  • Grant date
  • The number of shares owned by each shareholder
  • Vesting date
  • Strike price
cap table structure - vesting templates
Create and use different vesting schedules for your shareholders and employees on EquityList

Fill in the transfer details

As your company grows, and as time goes by, there are bound to be transfers of shares, repurchases, etc. Enter all these details in the cap table.

Adding these details to the cap table will keep the table updated and provide accurate information about the equity structure and holders at any given point in time. Moreover, this will help establish the price of your shares.

But at the same time, it is also important to note that recording these details in Excel sheets can often be tricky. This is where using platforms like EquityList simplifies the process.

share transfer
Record historical and active share certificates on EquityList

Add information about convertible notes/bonds

Your capitalization table should have one section for information about convertible notes and bonds. A convertible note is a debt that can be later, converted into equity or be paid back to the investor.

If your company has issued convertible securities, you should fill in the information in the cap table, as it may affect the shareholdings of your company.

To add all the above information to your startup capitalization table is easier said than done. While i can be easy in the beginning when you have just a few equity transactions, as the number of your investors grows or there are transfers, it can get difficult to maintain the cap table manually.

You’d need an efficient cap table tool such as EquityList to help you make this process more efficient and accurate. It’s a tool that makes equity management easy for startups.


It goes without saying that your startup capitalization table has to be accurate, updated, and precise at any given point in time. And when done manually, there are bound to be mistakes. That is why you need a platform like EquityList.

It’s software especially designed to create and manage cap tables for startups. It makes updating the table a breeze, and all while staying compliant to rules and regulations.

To explore EquityList for your startup cap table, sign up here for a demo.