A capitalization table (cap table) tracks who owns what percentage of a company — founders, investors, employees with equity — and how that ownership changes over time. Keeping it accurate from day one avoids serious problems when it matters most: fundraising and acquisitions.
What belongs on a cap table
Founder shares, any outstanding SAFEs or convertible notes, an option pool for employees, and any advisor or investor equity all need to be tracked — along with vesting schedules, since unvested shares affect what's actually owned at any given moment.
Why dilution modeling matters before you raise
Every new investment round dilutes existing shareholders' percentage ownership — modeling out how a new round, plus any outstanding convertible instruments converting simultaneously, affects everyone's stake helps founders negotiate from an informed position rather than being surprised at closing.
A messy cap table is a red flag to investors
Inconsistent records, undocumented verbal equity promises, or unclear vesting terms are exactly what due diligence in a fundraising round or acquisition is designed to catch — and they can meaningfully slow down or derail a deal that's otherwise ready to close.
Getting the underlying documents right is what keeps it clean
A cap table is only as accurate as the equity documents behind it — properly drafted stock purchase agreements, option grants, and convertible instruments, consistently recorded as they're issued, are what actually keep it reliable over time.