Cap Table (Capitalisation Table)
The register of who owns what in a company: every share, option, warrant and convertible instrument, with the fully diluted ownership each implies. It is the document a round is negotiated over, because every term that sounds like a price (pre-money, pool, cap) is really an instruction about how the next version of this table is drawn. Build one through a SAFE and a seed round at /labs/cap-table.
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Why Cap Table (Capitalisation Table) matters in interviews
Every venture term that sounds like a price is really an instruction about the cap table, so a candidate who can build one from a term sheet can answer most of the technical questions a venture interview contains. The cap table exercise, in a spreadsheet or on a whiteboard, is the closest thing the industry has to the modelling test, and the traps in it are the same three every time: what the pre-money is struck over, where the pool sits, and what the converting instruments take.
How it works in practice
What it holds. Every claim on the company: ordinary shares held by founders and employees, options granted and options reserved in the pool, warrants, each series of preferred stock, and any SAFE or note that has not yet converted, shown as the shares it would become. Each row carries a share count and a fully diluted percentage; the fully diluted count treats every option as exercised and every convertible as converted.
Worked, on the company the lab uses. Two founders hold 5,000,000 and 3,000,000 shares. A $500,000 SAFE at a $5m post-money cap promises 10% of the pre-round capitalisation, which is 888,889 shares. A seed round of $3m at a $12m pre-money asks for a 10% post-money unallocated pool, in the pre. The pool top-up is 1,269,841 shares, the price per share is $12m ÷ 10,158,730 = $1.18125, and the investor receives 2,539,683 shares. After the round: founders 63.0%, pool 10.0%, SAFE 7.0%, investor 20.0%, on 12,698,413 shares.
The number to write down before agreeing anything: the effective pre-money. The headline was $12m, but the pool top-up was worth $1.5m at the round price, and it was created inside the pre-money, so the founders and the SAFE were priced at $10.5m. That gap is the option pool shuffle, and it is the first thing an experienced founder negotiates. The lab at /labs/cap-table lets the pool move between the pre and the post so the gap can be watched opening and closing.
Round by round. A cap table is a history: each round adds a series, tops up the pool and pushes every earlier row down by the same factor. A typical founder path runs from 100% to around 60% after seed, 45% after a Series A, and 25 to 30% by a Series C. The question at every step is not how much was given up but what the smaller fraction is now worth.
What candidates get wrong
- Striking the price over the wrong count. The pre-money is divided by the fully diluted pre-round count including converting SAFEs and, if the term sheet says so, the pool top-up. Dividing by founder shares alone overstates the price.
- Forgetting the pool comes off the pre. Ten per cent post-money in the pre on a $15m post-money is $1.5m of the founders’ valuation, not a footnote.
- Treating a SAFE’s cap as its valuation. A post-money cap fixes a fraction of the pre-round capitalisation; the money then gets diluted by the pool and the round like everyone else.
- Reading basic percentages. Options and convertibles exist whether or not they have been exercised, so the fully diluted number is the only one that predicts what a sale pays each holder.
Cap Table (Capitalisation Table): frequently asked questions
What is a cap table?
A capitalisation table is the record of who owns what in a company: every class of share, every option granted and reserved, every warrant and every convertible instrument, with the number held by each person or fund and the percentage each represents on a fully diluted basis. It is the document a financing round is negotiated over, and after each round it is redrawn to show the new investor, the enlarged option pool and the diluted stakes of everyone who was already on it.
How do you calculate price per share in a priced round?
Divide the agreed pre-money valuation by the fully diluted share count the term sheet says it is struck over: usually all existing shares and options, the shares any SAFEs or notes convert into, and the option pool increase if the pool is in the pre-money. The new investor then receives their cheque divided by that price in new shares, and their percentage equals their cheque divided by the post-money valuation.
What does fully diluted mean on a cap table?
That every option, warrant and convertible instrument is counted as if it had already been exercised or converted into shares, and the unallocated option pool is counted too. Fully diluted percentages are lower than percentages of shares actually issued, and they are the ones investors quote and negotiate, because they are what a sale would actually pay out on.
Practise it
Take a company from founding through a SAFE and a priced seed round. Set the cap, the pre-money and the option pool, watch the price per share and every holder’s stake move, then check your own arithmetic against the table.
Open Cap Table Builder, free, 15 minWhere Cap Table (Capitalisation Table) comes up
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