💡 Hook / Intro
If you’re building a startup, one document quietly determines who actually owns the company — your Cap Table.
Yet many first-time founders either:
- Don’t track it properly
- Don’t understand how ownership changes
- Or make equity decisions emotionally (which leads to conflict later)
A Cap Table is not just a spreadsheet — it’s the foundation of ownership, control, and trust in your company.
Let’s make it simple 👇
1️⃣ What Is a Cap Table?
A Cap Table (Capitalization Table) shows who owns how much of your company.
It lists:
- Founders
- Investors
- Advisors
- Employees (ESOP pool)
And it tells you how ownership is distributed across them.
💬 Think of it as the ownership map of your startup.
2️⃣ Why Cap Tables Matter
Your cap table influences:
| Stakeholder | Why It Matters |
|---|---|
| Founders | Who controls decisions & how value is shared |
| Investors | Whether your company is structured for scalable funding |
| Employees | Clarity on stock options & growth incentives |
A messy cap table scares investors.
A clean cap table builds confidence.
3️⃣ Key Components of a Cap Table
| Component | Meaning |
|---|---|
| Shareholder Name | Who holds equity |
| Number of Shares | How many shares they own |
| Ownership % | Percentage of the company they hold |
| Share Class | Common shares vs. preferred shares |
| ESOP Pool | Equity reserved for employees |
💡 Important: Always track fully diluted ownership (shares + options + future grants).
4️⃣ How Ownership Changes Over Time
Your cap table evolves with milestones:
| Stage | What Happens |
|---|---|
| Founding | Founders split 100% equity |
| Hiring | Create ESOP Pool (10–15%) |
| Pre-Seed/Seed Funding | Investor buys equity → founders get diluted |
| Series Rounds | More dilution, but valuation grows |
💬 Dilution is not a loss — if valuation grows, the value of your shares still increases.
5️⃣ Example Cap Table (Simple Version)
| Shareholder | Shares | Ownership % |
|---|---|---|
| Founder A | 60,000 | 60% |
| Founder B | 30,000 | 30% |
| ESOP Pool | 10,000 | 10% |
| Total Shares | 100,000 | 100% |
If an investor now buys 20% of the company, dilution happens → equity rearranges.
6️⃣ Avoid These Common Cap Table Mistakes
🚫 Giving equal equity to co-founders without discussing roles
🚫 No vesting — founders leaving with equity they didn’t earn
🚫 No ESOP pool — difficult to attract talent
🚫 Not updating cap table after every change
🚫 Verbal promises of ownership (never do this!)
💡 Rule: If equity is not documented, it does not exist.
7️⃣ Use Tools to Manage Cap Tables Professionally
Start lean, then scale your system 👇
| Stage | Tool Recommendation |
|---|---|
| Early Stage | Google Sheets / Excel |
| Growing | Carta, Ledgy, Gust Equity, Eqvista |
These tools manage:
✅ Vesting schedules
✅ Dilution calculations
✅ Investor-ready reports