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Concepts and worked examples

Cap table concepts and examples.

Learn cap table management, ownership, dilution, vesting, SAFEs, and financing terms through clear explanations and worked examples.

Start with the basics.
Follow the worked examples.

24 articles in this section

Ownership basics

What is a cap table?

Read a capitalization table and understand the ownership denominator.

3 min read

Authorized, outstanding, and fully diluted shares

Understand which share counts belong in each ownership calculation.

2 min read

Understand stock splits and ownership percentages

Distinguish a change in share units from a new investment.

2 min read

Compare transfers, repurchases, and new issuances

Separate three transactions that can produce different ownership results.

2 min read

Cap table glossary

Find concise definitions and links to the relevant workflows.

3 min read

Employee equity

Vesting and option pools explained

Separate the grant, the vesting schedule, and the available reserve.

3 min read

Stock options, RSUs, and restricted stock

Understand what each award represents and how it becomes a holding.

2 min read

ISO and NSO stock options explained

Separate a recorded option classification from a tax determination.

2 min read

Early exercise, reverse vesting, and 83(b)

Keep exercise, vesting, and election records distinct.

2 min read

Single-trigger and double-trigger vesting acceleration

Understand which conditions change the unvested balance.

2 min read

Build an option-pool hiring forecast

Calculate a pool need from planned hires rather than a headline percentage.

2 min read

Follow an option grant from issuance to cancellation

Connect one grant’s lifecycle to ownership and plan balances.

2 min read

Fundraising

Understand equity dilution

Work through a funding round and see why percentages change.

2 min read

Pre-money and post-money valuation explained

Connect a financing’s headline valuation to its share price.

2 min read

SAFEs and convertible notes on a cap table

Track convertible instruments without treating them as issued shares.

3 min read

Anti-dilution protection in a down round

Understand how a lower-priced financing changes preferred conversion terms.

2 min read

Calculate note interest and conversion shares

Reconcile a note’s principal, interest, conversion price, and shares.

2 min read

Calculate dilution from a pre-money pool increase

See how pool timing changes the price and existing holders’ ownership.

2 min read

Exit planning

Liquidation preferences and exit proceeds

Compare ownership with what a holder receives in a sale.

2 min read

Distinguish exit proceeds from share value and exercise cost

Understand what a modeled payout includes before treating it as cash received.

2 min read

Reporting concepts

Stock compensation expense and valuation assumptions

Understand the different values in an equity compensation report.

2 min read

Cap table management

A practical cap table maintenance checklist

Build a repeatable review process for reliable equity records.

2 min read

Prepare your cap table for financing diligence

Build a traceable review package from equity records and source documents.

2 min read

Reconcile a cap table with its source records

Explain differences by date, denominator, instrument, and transaction.

2 min read

Your equity, clearly

Put the reading into practice.

Explore the sample company or continue with your own records.

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