Cap table.
In plain English
A capitalization table, or cap table, is the ledger a private company keeps of every equity holder, the class of shares held, and each stake's percentage. It tracks founders, employee option pools, and each investor round separately, because different classes carry different rights. Fully diluted figures assume every option and convertible instrument turns into stock, which is the number that matters in a sale. A cap table changes with every financing, and each round typically dilutes existing holders unless they invest again. Public companies disclose ownership through filings instead.
01Why it matters
If you take equity as part of a job offer, the cap table decides what your percentage really is once options and preferred rounds are counted, and that is the difference between a meaningful stake and a rounding error.
02The math, step by step
A startup has 8,000,000 founder shares, a 1,000,000 share option pool, and 1,000,000 preferred shares from investors. Fully diluted that is 10,000,000 shares. A grant of 50,000 options is 50,000 divided by 10,000,000, or 0.5 percent.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
A balance sheet reports dollar amounts of assets, liabilities, and equity. A cap table reports share counts and ownership percentages by holder and class. The balance sheet says how much equity capital came in. The cap table says who holds it.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice