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Intermediate

What is a cap table

Also known as: capitalization table

Definition

A cap table (capitalization table) shows who owns how many shares and options in a company, and what percentage each holds on a fully diluted basis.

Why it matters

The cap table answers who controls the company and who gets what from a sale.

Common mistakes

Treating the cap table as the legal record. The cap table is a working model, the shareholder register the company keeps by law is the record, and the two must agree.

Related terms

Worked exampleIllustration

The cap table of a fictional clinic booking app, before and after its seed round

Issued shares after the round (9,000)

  • Founder A, 4,200 shares46.7%
  • Founder B, 2,800 shares31.1%
  • Investor, 2,000 shares22.2%

Fully diluted after the round (10,000)

  • Founder A42%
  • Founder B28%
  • Investor20%
  • Option pool, 1,000 shares, reserved and not issued10%

Steps

  1. On day 1 the company has 7,000 issued shares: Founder A holds 4,200 and Founder B holds 2,800.60% and 40%

  2. The term sheet reserves a pool of 1,000 shares before the money. Nothing is issued yet, so the pool counts only in the fully diluted column.1,000 reserved

  3. The investor buys 2,000 new shares, so 9,000 shares are issued and 10,000 are counted fully diluted.9,000 and 10,000

  4. On issued shares alone, the investor holds 2,000 of 9,000.22.2%

  5. On a fully diluted basis, the investor holds 2,000 of 10,000.20%

The investor's 20% counts the pool. On issued shares alone they hold 22.2%.

Illustration

The table, one step at a time

After the seed
HolderSharesFully diluted
Founder A4,20042%
Founder B2,80028%
Option poolReserved, not issued1,00010%
Investor2,00020%
Founder A 42%, Founder B 28%, Option pool 10%, Investor 20%42%28%20%

9,000 shares issued and 10,000 counted fully diluted. The investor's 20% is measured on the 10,000.

The pie's area is every share counted fully diluted. The dotted ring is day 1: the founders' slices never shrink in shares, the pie grows around them.

Definition

A cap table is a working table of everyone who holds the company's shares or a right to them: founders, investors, employees with options, the unallocated option pool, and SAFEs or convertible notes waiting to convert. Each row shows a number of shares and two percentages. Issued counts only the shares that exist today. Fully diluted counts every share that exists or has been promised, including the whole pool. The cap table is a model, and it must agree with the legal record: the shareholder register every Israeli company keeps under the Companies Law.

Why it matters

Investors ask for it before they fund, and a gap found in due diligence can delay a round. It is also where founders see a round before they sign it: the pool, the SAFEs and the new investor together, on a fully diluted basis.

Directly related: Equity, Dilution, Option pool.

Improvement tips

  • Keep one shared, up to date file, and update it on the day any share, option or SAFE is issued, transferred or cancelled.
  • Show both columns, issued and fully diluted, so nobody mistakes whose percentage is whose.
  • Check the cap table against the company's shareholder register, at the latest before every round. They are two documents that must agree.
  • Model a sale at a few prices to see what each holder would receive after any liquidation preference.

Common mistakes

  • Tracking equity promises in emails or chats instead of signed agreements recorded in the register.
  • Forgetting to update the table when an employee leaves and unvested options return to the pool.
  • Showing investors only the issued shares, without the pool and the SAFEs.

Related terms

StartupsBeginner

Equity

Equity is ownership of a company, measured in shares and percent. On a balance sheet the same word means book equity: what the business owns minus what it owes.

StartupsIntermediate

Dilution

Dilution is the fall in existing shareholders' percentage of a company when it issues new shares. The percentage drops, while the stake's value can rise.

StartupsIntermediate

Option pool

An option pool is a block of shares reserved for future employees' options. If it is created before the investor's money, existing shareholders pay for it.

StartupsIntermediate

SAFE

A SAFE (simple agreement for future equity) is a contract where an investor pays now and gets shares in the next priced round, with no valuation set today.

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Quick check

Why can an investor hold 20% on a fully diluted basis and 22.2% of the issued shares at the same time?

Choose an answer

Frequently asked questions

Do I need a cap table before I start my company?
A simple one, yes. On day one it has two or three rows, but writing down the founders' split before anything else prevents arguments later.
When does the cap table become critical?
When you raise money, grant options or talk to a buyer. Investors will ask for it before they fund the company.
Can I keep my cap table in a spreadsheet?
Yes, in the early stages. What matters is one shared file, updated every time a share, an option or a SAFE is issued, and checked against the shareholder register.
How does a cap table help me plan?
Add the next round, a larger pool or a SAFE conversion as new rows, and see your percentage before you negotiate.
What is the difference between the cap table and the shareholder register?
The register is the legal record the Companies Law requires every Israeli company to keep: each holder, the number and type of shares and the dates of allotments and transfers. Allotments and transfers are also reported to the Registrar of Companies. The cap table is your working model, and it must agree with the register. Educational material, not legal or tax advice. Check your own case with a lawyer or an accountant.
How do I clean up a messy cap table?
List every promise ever made, in writing or not, turn each one into a signed agreement or a documented release, and record the result in the register. A lawyer drafts the agreements. Educational material, not legal or tax advice. Check your own case with a lawyer or an accountant.
What goes wrong when a company ignores its cap table?
Nobody is sure who holds what, promises made to people who left stay open, and the next investor's due diligence finds the gaps, which can delay the round.
What should I show a potential investor?
A fully diluted view: every holder, the option pool, outstanding options and every SAFE or convertible note, so the investor sees exactly what they are joining.
What is a cap table in plain words?
A list of everyone who owns a piece of the company, how many shares each one has and what percentage that is.
What does fully diluted mean?
Counting every share as if every option had been granted and exercised and every SAFE had converted, including the part of the pool not granted yet. It shows the most that anyone's percentage can shrink from what is already promised.
Do I need a lawyer to manage my cap table?
Not to keep the table itself. A lawyer drafts the agreements behind each row, and the company's shareholder register has to match them. Educational material, not legal or tax advice. Check your own case with a lawyer or an accountant.
Is keeping a cap table difficult?
No, if you update it every time something changes. The risk comes from relying on memory and old emails.

Sources: Companies Law 5759-1999, sections 127 to 130 (nevo.co.il), Companies Regulations (Reporting, Registration Details and Forms) 5760-1999, regulation 2 and forms 3 and 4 (nevo.co.il)

Last reviewed: 2026-09-24

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After I finished a cosmetology course at a leading company, I was confused. I didn't know how to open a business, what to sell from home, or how to bring in clients. Since I reached out to Mobius, everything has changed. We built an organized plan with clear steps and no unnecessary risks. Today I see results, and I'm growing and developing every month.

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Mark

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When I finished a massage course, I imagined a different world. I found out it's a hard field, and financial stability isn't easy to find. When I came to Mobius, something changed. We started an organized process and built a business plan. Without Mobius? I probably would have given up. Today I believe in myself and in my own path.

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