Capitalization Tables 101 - What Goes Into a Cap Table?
Written By Haley Kopp
If you’re launching a startup in Delaware, you’ve probably heard how important it is to “keep
your cap table clean.” But what exactly goes into a cap table? And why does it matter?
A capitalization table (cap table) is more than just a list of shareholders. It’s a critical record of
your company’s ownership and a tool for making informed decisions about fundraising, hiring,
and exits. Here's a breakdown of the essential information every Delaware startup should
include in its cap table.
1. Stockholder Names and Addresses
Start with the basics: who owns the equity? This includes:
● Founders
● Employees and advisors (if they’ve been granted stock or options)
● Investors (angel investors, VCs, etc.)
Make sure each entry reflects the legal name of the holder (e.g., John Smith or Smith Ventures
LP), and not just email handles or nicknames. You’ll also want to keep track of each
stockholder’s personal address.
2. Number and Class of Shares Held
Each entry should show:
● Number of shares held
● Class of shares (e.g., Common Stock, Series Seed Preferred, Series A Preferred)
Different classes have different rights, especially for preferred stock, so it’s important to
distinguish them clearly.
3. Ownership Percentage
Include both:
● Basic ownership (based only on currently issued and outstanding shares)
● Fully diluted ownership (reflecting all shares that could be issued, including options,
warrants, and convertible instruments)
Fully diluted percentages help everyone understand how equity might shift over time.
4. Grant Dates and Vesting Schedules
For founders, employees, and advisors with restricted stock or stock options, include:
● Grant or issuance date
● Vesting schedule (e.g., 4 years with a 1-year cliff)
● Shares vested vs. unvested
This is especially important for understanding retention and termination rights.
5. Equity Plan Details
If your company has adopted an equity incentive plan (which most Delaware startups eventually
do), track:
● Total shares reserved under the plan
● Shares granted (and to whom)
● Shares available for future grants
This is often referred to as the “option pool.”
6. Convertible Securities
Track convertible notes, SAFEs, and other instruments that may convert into equity in the future
by including:
● Name of the holder
● Principal amount
● Valuation cap and/or discount terms
● Date issued and potential conversion terms
Convertible securities don’t factor into the “issued and outstanding” count, but they impact the
fully diluted ownership of the company.
7. Board and Stockholder Approvals (Optional but Helpful)
It can be useful to track when equity grants or financings were approved by the board (and, if
applicable, the stockholders). This helps validate that equity was properly authorized.
Final Thoughts
Your cap table tells the story of your company’s ownership. You want that story to be clear,
current, and accurate. Whether you’re onboarding a new hire, raising a round, or planning an
exit, a well-maintained cap table is one of the most powerful tools you have.
Adam Yohanan is a transactional business lawyer with extensive experience representing companies, investors, and entrepreneurs in a wide range of high stakes business transactions.
Adam handles the small and large transactions in the life of a businesses, including mergers & acquisitions, entity formations, partnerships and joint ventures, investing and fundraising, commercial contracts, and dissolutions. His office can be reached at 212-859-5041.
Haley Kopp is a corporate lawyer focused on representing start-ups and small companies in formations, venture capital, angel investor financings, mergers and acquisitions, and general corporate matters.
Haley's diverse experience gives her a practical approach to solving complex business issues, whether guiding companies through financing rounds or corporate transactions. Her office can be reached at (619) 512-3652.
This guide is meant for educational and informational purposes only and should not be considered legal advice. It is essential to consult with an attorney or other advisors regarding all legal and other important matters.
