A Cap Table Is a Reconciliation, Not Just a Percentage List

A capitalization table, or cap table, records who owns—or may later own—a company. Founders use it to plan hiring, model financings and answer investor diligence questions.

The percentage column is the output, not the source of truth. A reliable cap table starts with signed agreements, approvals and the company’s stock ledger, then applies a clearly defined denominator. For a Delaware corporation, the distinction matters: Delaware law defines the stock ledger by reference to stockholders of record, their registered shares, and issuances and transfers. For a stockholder meeting, the ledger is the evidence of who may vote as a stockholder. A planning spreadsheet is not a substitute for that ledger or the underlying legal documents (Delaware General Corporation Law, §§219 and 224).

What belongs on a cap table

At minimum, track these categories separately:

Category	What it represents	Included in outstanding-share capitalization?	Commonly included in a fully diluted view?
Outstanding common stock	Shares actually issued and still outstanding	Yes	Yes
Outstanding preferred stock	Issued preferred shares, by series	Yes	Yes, usually on an as-converted basis
Granted, unexercised options	Rights to buy shares under an equity plan	No	Yes
Unallocated option pool	Plan shares available for future grants	No	Often yes
Warrants	Contractual rights to acquire shares	No	Usually yes
SAFEs and convertible notes	Instruments that may convert in a future financing or other event	Not as shares	Only under stated conversion assumptions

“Fully diluted” is not useful unless the table says what it includes. A basic internal view may include outstanding stock, granted options and the remaining pool. A financing model may also assume conversion of every SAFE, note and warrant. Label the denominator rather than allowing readers to infer it.

A share-count percentage also does not necessarily describe voting power, liquidation proceeds or other economic rights when the company has multiple classes or preferred stock. Model those rights separately when they matter to the decision.

Also distinguish authorized shares from outstanding shares. Authorized shares are the ceiling established by the certificate of incorporation; they are not owned merely because they are authorized. Show authorized totals by class so the company can check whether it has capacity for proposed issuances.

Build the table from documents, not memory

Start with a document inventory:

• certificate of incorporation and amendments;
• board and stockholder consents approving issuances and equity plans;
• founder and investor stock-purchase agreements;
• option, restricted-stock and warrant agreements;
• exercise notices, repurchases, cancellations and transfers;
• every SAFE and convertible note, including amendments and side letters; and
• the stock ledger and equity-plan register.

Create one row per holder and security position. Useful fields include the holder’s legal name, security type and class, certificate or grant identifier, issue or grant date, number of shares, exercise price, vesting terms and approval document. For a SAFE or note, record the purchase amount or principal, cap, discount, interest, maturity date where applicable, instrument version and any pro rata or most-favored-nation rights.

Reconcile the table in three directions:

1. Rows to legal records: every issuance or grant has an executed document and required approval.
2. Columns to control totals: holder rows add to the outstanding shares, granted options and remaining pool shown in the summary.
3. Summary to charter and plan limits: issued or reserved securities do not exceed the relevant authorized or approved amount.

If a founder was promised 5% in an email but no shares or options were approved and documented, do not silently place that person among issued holders. Flag the promise for counsel to resolve. Apply the same rule to unsigned SAFEs, obsolete drafts and grants discussed but never approved.

Calculate ownership with an explicit denominator

For outstanding-share capitalization:

Holder percentage = holder’s outstanding shares ÷ total outstanding shares

For a chosen fully diluted view:

Fully diluted percentage = holder’s as-converted securities ÷ defined fully diluted total

Consider a company with this capitalization before external financing:

Position	Securities	Outstanding-share %	Fully diluted %
Founder A common	4,000,000	50.0%	40.0%
Founder B common	4,000,000	50.0%	40.0%
Granted options	500,000	—	5.0%
Unallocated pool	1,500,000	—	15.0%
Total	10,000,000	100.0% of 8,000,000 outstanding	100.0% of 10,000,000

Neither percentage is wrong. They answer different questions. The first counts issued shares today; the second shows the effect of the listed options and equity reserve under the stated assumption.

Use formulas rather than typed percentages, and include a check row that must equal 100%. Preserve enough decimal precision for calculations even if displayed results are rounded.

Model SAFEs separately from the legal ownership table

A SAFE is a contractual right to receive stock later, not outstanding stock today. Keep it in an instrument schedule and create a separate pro forma conversion model.

For YC’s post-money valuation-cap SAFE, a useful first estimate is:

Estimated ownership sold = investment amount ÷ post-money valuation cap

A $500,000 SAFE at a $10 million post-money cap therefore represents an estimated 5% before the priced financing. YC cautions that a SAFE may convert into more than the estimate when the financing valuation is below or too close to the cap. Its guide also explains that post-money SAFEs are diluted by the new money in the priced round (YC post-money SAFE guide). Discounts, differing caps, note interest and instrument definitions can change the result.

Do not apply that shortcut to every convertible security. Model each instrument from its signed terms. If notes or SAFEs are converting in a priced round, the agreed price-per-share method can shift dilution among founders, converting holders and new investors. Cooley’s worked examples show different outcomes under pre-money, percentage-ownership and dollars-invested methods using the same headline financing assumptions (Cooley GO). For more on note mechanics, see this guide to convertible notes.

Treat the option pool as a financing term

An option pool is not just an administrative reserve. In many priced rounds, investors seek a target unallocated pool after closing but include the shares needed for that increase in the pre-closing capitalization used to calculate their price. Under that structure, the top-up dilutes existing holders rather than the new investor (Cooley GO).

Model at least two pool cases:

• the pool required by a role-by-role hiring plan for the next 12–18 months; and
• the pool percentage proposed in the term sheet.

For each case, show founder, existing investor, converting security, employee and new-investor percentages after the round. A higher valuation paired with an unnecessarily large pre-money pool can leave founders with less ownership than a lower valuation and a smaller, evidence-based pool.

Keep one current table and separate scenarios

Maintain a dated, access-controlled current cap table that changes only when an approved transaction occurs. Put hypothetical financings, hires and exits in separate scenario tabs or files. Each scenario should state:

• the “as of” date;
• pre- and post-money valuation assumptions;
• new cash invested;
• SAFE and note conversion assumptions;
• option-pool treatment;
• whether pro rata rights are exercised; and
• the exact fully diluted definition.

Before a financing, option grant or secondary sale, have company counsel reconcile the model against the governing documents. Every number should trace to a document, every percentage to a formula, and every forecast should be visibly separated from legal ownership today.