Ownership basics
What is a cap table?
Learn what a capitalization table records, how ownership percentages are calculated, and why outstanding and fully diluted shares differ.
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A record of company ownership
A cap table, short for capitalization table, records a company’s equity holders and the securities associated with them. It helps answer who holds what, how much has been issued, and how ownership changes after a grant, financing, or other transaction.
A useful cap table connects holders to share classes, quantities, issuance dates, and instrument terms. The percentages are calculated from those records. They are not a substitute for them.
Shares represent ownership in a company, and different classes can carry different rights. The SEC’s introduction to stocks explains the basic distinction between common and preferred stock.
Calculate an ownership percentage
For a simple company with one share class, divide a holder’s shares by the total shares counted in the chosen ownership basis.
Suppose two founders hold 6,000,000 and 4,000,000 shares, with no other instruments or reserve. Their ownership percentages are 60% and 40%.
| Holder | Shares | Ownership |
|---|---|---|
| Founder A | 6,000,000 | 60% |
| Founder B | 4,000,000 | 40% |
| Total | 10,000,000 | 100% |
A percentage is meaningful only when its denominator and date are clear. “One percent of the company” can describe different share counts under different assumptions.
Outstanding and fully diluted shares
Outstanding ownership focuses on issued shares. Fully diluted ownership generally also considers instruments that can become shares and often includes the unallocated option pool. The precise definition should be checked against the relevant agreement or report. Cooley explains this distinction in Option Grants: Fully Diluted or Issued and Outstanding.
In Cap Table, outstanding counts issued share certificates. Fully diluted adds option grants, unsettled RSUs, and warrants, with an option to include available shares from open equity plans. SAFEs and convertible notes are excluded from these ownership counts until conversion.
If the example company adds a 2,000,000-share unallocated reserve and includes it in the fully diluted basis, the denominator becomes 12,000,000. Founder A then has 50% on that basis, even though the founder still holds 6,000,000 shares.
What an ownership percentage does not show
A cap table percentage does not by itself determine voting power, the value of an award, or the proceeds a holder would receive in a sale. Share-class rights, preferences, exercise prices, and other terms can affect those outcomes.
Vesting is another separate question. In Cap Table, issued shares can be outstanding while still subject to vesting, and unvested option grants still contribute to the fully diluted count. Do not use an ownership percentage as a shortcut for the number of vested or immediately exercisable units.
Keep the table connected to its records
Update the cap table when securities are issued, exercised, settled, cancelled, transferred, or converted. Retain the supporting agreements and the dates that explain each change.
Before sharing an export, check the company, date, ownership basis, and treatment of the unallocated pool. These details let another reader reproduce the percentages instead of guessing at the assumptions.
To put this into practice, follow Get started with Cap Table or import your existing records from CSV.