A cap table (capitalization table) is a spreadsheet or document listing all equity holders in a company — founders, employees (options), angels, VCs, and convertible instrument holders — along with their ownership percentages, share counts, and fully diluted positions. It is essential for fundraising, M&A, and employee equity management.
The cap table is the authoritative register of who owns what in a company. It typically shows: (1) Founders — number of shares, percentage of total, vesting schedule if applicable. (2) Employees/advisors — option pool size, options granted, vested/unvested, strike price, fully diluted ownership. (3) Investors — share class (common vs. preferred), investment amount, price per share, ownership percentage at time of investment, and current diluted ownership. (4) SAFEs/convertible notes — principal amount, cap, discount, anticipated conversion dilution on a fully diluted basis. The cap table is maintained at two levels: (1) Pre-money/Post-money — a funding round's dilution is calculated on the pre-money valuation (cap table before the round) and the post-money valuation (after). If a company has a $10M post-money cap on outstanding SAFEs and raises $3M at $15M post-money valuation, the SAFE holders convert at the cap and own $10M/$15M of the post-Series-A company before the new investors' shares. Fully diluted cap table: includes all shares that could exist — outstanding shares + options (granted, ungranted pool) + warrants + conversion of all convertible instruments. Investors and lenders who analyze equity capital structure want the fully diluted picture to understand true future dilution. For business lending: traditional lenders (SBA, banks, alternative lenders) rarely require a cap table unless the business has venture capital, complex equity structures, or the lender is analyzing control/ownership. In acquisition financing or SBA loans for business acquisitions, the cap table of the acquisition target may be relevant. The IRS and FinCEN's beneficial ownership requirements (https://www.fincen.gov/resources/statutes-regulations/cdd-final-rule) require financial institutions to verify 25%+ equity owners — the cap table provides this documentation.
A fully diluted cap table shows ownership assuming all potential shares are issued — outstanding common and preferred shares, all granted options, ungranted option pool shares, warrants, and conversion of all convertible instruments (SAFEs, convertible notes). It shows the worst-case dilution scenario and is the most accurate picture of future ownership. Investors calculate returns on a fully diluted basis.
Founders typically own the cap table, with legal counsel maintaining the official version. Many companies use cap table management platforms (Carta, Pulley, Captable.io) to automate updates, calculate dilution scenarios, and manage option grants and vesting schedules. As companies grow past 10-15 equity holders, spreadsheet-based cap tables become error-prone — dedicated software becomes important.
Practically, no — a sole owner has 100% ownership; no formal cap table is needed. Cap tables matter when there are multiple equity holders: co-founders, employee equity programs, investors, or complex ownership arrangements. If you are considering bringing on partners, advisors with equity, or outside investors, setting up a formal cap table from the beginning is best practice.