Cap Table (Capitalization Table)
A cap table is the record of a company’s ownership, showing who owns equity, how much they own, and under what terms.
Definition
Definition A capitalization table (cap table) is a structured record of a company’s ownership. It lists shareholders, equity classes, option pools, convertible instruments, and other rights that affect economic outcomes. In venture-backed companies, the cap table is not just a list of names—it is the ledger that determines dilution, control, and payout order. Context Early-stage cap tables can become complex quickly due to SAFEs, convertible notes, option pools, and multiple rounds with different terms. A company may look “clean” on the surface while having meaningful hidden dilution from outstanding SAFEs or reserved option pools. For investors, cap table quality matters because it affects ownership continuity, governance clarity, and the company’s ability to raise follow-on capital without friction. Allocator and Family Office Relevance Family offices investing directly into startups often rely on cap table clarity to assess whether their ownership is meaningful relative to the risk taken and whether future dilution is likely to be excessive. Families also evaluate whether founder ownership and incentives remain strong and whether unusual structures (multiple SPVs, fragmented small holders) create governance or fundraising challenges. Decision Authority and Process Considerations Cap table review frequently triggers counsel involvement, especially when instruments have non-standard terms or when the company’s financing history is inconsistent. Larger direct checks typically require cap table diligence as a baseline risk control. Key Takeaways Cap tables define ownership, dilution, and payout rights Hidden dilution often sits in SAFEs and option pools Clean cap tables support smoother future fundraising Cap table diligence is essential for direct venture investing