What a cap table contains
A fully diluted cap table shows: every shareholder (founders, employees, advisors, investors) and their ownership, every class of shares (common, preferred, different series), every outstanding option, warrant, SAFE, and convertible note and their conversion terms, the ownership percentage of each holder on both an issued and fully diluted basis.
Fully diluted is the number that matters for fundraising — it includes all potential future shares from options and convertibles, showing what everyone owns if every instrument converts.
How to read a cap table
The key numbers: pre-money ownership (what everyone owns before new investment), post-money ownership (what everyone owns after new investment and conversion of all instruments), and the price per share implied by the valuation. A $5M pre-money valuation on 1M fully diluted shares implies a $5 price per share. New investors buying $1M of shares at $5 receive 200K shares and own 200K/1.2M = 16.7% post-money.
The option pool is shown as reserved but unissued shares — diluting everyone else pro-rata. SAFEs and convertible notes are shown as contingent shares that convert at the next priced round.
Common cap table mistakes that block funding
Missing founder vesting: founders without vesting schedules are a red flag for Series A investors — it means a co-founder can leave on day one with 50% of the company. Fix: implement 4-year vesting with 1-year cliff immediately, even retroactively. SAFE stacking: multiple SAFEs with different caps and discounts create a complex conversion waterfall that's expensive to model and sometimes creates surprises at Series A (a large early SAFE at a low cap can take a bigger stake than expected when it converts). Undocumented advisor equity: informal equity promises that aren't documented in option agreements don't exist legally — but they create disputes that surface in due diligence. Wrong share counts: cap tables maintained in spreadsheets drift from the legal record over time. Use a cap table tool that stays in sync with your legal documents.
When to clean up your cap table
Before every funding round — not during it. Investors who discover cap table problems during diligence lose confidence in the founder's operational rigour. Clean your cap table at least 3 months before you start fundraising: resolve undocumented equity promises, ensure all SAFEs are properly documented, confirm option grants are properly authorised, and reconcile the spreadsheet against your legal documents.
CAPLINK's cap table tool maintains a live, legally-accurate cap table that updates automatically as rounds close and options vest — so you're always ready for due diligence.