A cap table is the record of who owns what in your company. It is one of the first documents an investor asks for, and one of the most common places diligence finds problems. Keeping it accurate from the first share is far easier than fixing it during a round.
What a cap table shows
- Issued shares: common stock held by founders and employees, and preferred stock held by investors.
- Options and other equity awards: granted, vested and unvested, with strike prices.
- The option pool: shares set aside for future grants that have not been granted yet.
- Convertible instruments: SAFEs, convertible notes and warrants that will turn into shares later.
Investors usually look at the cap table on a fully diluted basis: every share that exists or could exist from options, the pool and conversions. That is the number your valuation is divided by.
Sizing the option pool
The option pool reserves equity to hire. Investors often ask for a larger pool before a round, and whether that pool is created before or after the new money comes in changes who bears the dilution.
- Carta's data from 32,922 cap tables showed a median seed-stage option pool of 14.5% as of October 2024. Carta noted that many seed pools start at 10–12%, and that a 20% pool is often more than a company needs.1
- When a new pool is added to the pre-money valuation, existing shareholders absorb all of the dilution. A pool sized to a written hiring plan is easier to defend than a round number.
Common cap table problems
- Shares or options promised by email or verbally but never approved by the board or documented.
- Option grants made without a current 409A valuation. See our 409A guide.
- Missing 83(b) elections for founder stock. See our 83(b) guide.
- SAFEs and notes tracked in a spreadsheet that does not match the signed documents.
- Advisor equity without a signed agreement or vesting schedule.
- Share counts that do not match what was authorized in the certificate of incorporation.
What to have ready for diligence
- A current, fully diluted cap table that ties to the signed documents.
- Board consents approving every issuance and grant.
- Stock purchase agreements, option agreements and every SAFE, note and side letter.
- A pro forma model showing the cap table after the new round, including any pool increase and conversions.
Every number on the cap table should trace to a signed document and a board approval. If it does not, fix it before an investor finds it.