Cap Table FAQ: Ownership, Dilution, Stakeholders
Last verified Oct 7, 2026 · Reviewed by Value8 valuation team
What is a cap table?
A cap table (capitalization table) is the record of who owns what in a company: every stakeholder, every class of stock, every option, warrant, and convertible instrument, and the ownership percentage each one represents. It is the data set every later ownership question, financing round, and compliance filing reads from.
What does a cap table actually track?
Four kinds of objects: stakeholders (the people and entities that hold or may hold equity), share classes (Common, Series A Preferred, and so on, each with its own authorized share count and terms), instruments (options, RSUs, warrants, SAFEs, and convertible notes), and vesting schedules (how much of a grant has actually been earned at a given date). Ownership percentages are calculated from all four.
What's the difference between authorized and issued shares?
Authorized shares are the maximum number of shares a class is permitted to issue, set when the class is created in a corporate filing. Issued shares are the shares actually granted to stakeholders out of that pool. Issued can never exceed authorized, and companies typically authorize more than they currently issue to leave room for future grants without re-filing.
What's the difference between fully-diluted and outstanding ownership?
Outstanding ownership counts only shares that have actually been issued. Fully-diluted ownership also counts everything that could become shares: unexercised options, the unallocated option pool, warrants, and convertible instruments if they converted today. Founders and investors almost always negotiate on a fully-diluted basis, since it reflects ownership after everything currently promised has been granted and exercised.
What is a stakeholder on a cap table?
A stakeholder is any person or entity that holds, or may come to hold, equity in the company: founders, employees, investors, advisors, and funds. Every share, option, warrant, and note on the cap table belongs to a stakeholder, which is why adding stakeholders is typically the first setup step.
What is a share class?
A share class (Common, Series A Preferred, Series B Preferred, and similar) is a category of stock with its own authorized share count, Original Issue Price, and, for preferred classes, its own liquidation preference and other negotiated terms. Share classes are created through a corporate filing, usually the Certificate of Incorporation or an Amendment, which is the source of truth for the class's terms.
Do SAFEs and convertible notes show up on the cap table before they convert?
Yes, as instruments rather than as shares. A SAFE or convertible note raises money against a valuation cap and/or discount set when it's issued, and is recorded on the cap table from issuance. It converts into actual shares later, typically in a future priced round, at which point the cap table reflects the resulting shares instead of the note.
What is vesting, and how does it show up on a cap table?
Vesting is the schedule that determines how much of an option or RSU grant a stakeholder has actually earned by a given date, commonly a multi-year schedule with an initial cliff followed by monthly or quarterly vesting. A cap table tracks each grant against its vesting schedule, so ownership that depends on unvested equity is distinguishable from equity that's already been earned.
What are the risks of managing a cap table in a spreadsheet?
A spreadsheet works fine for a handful of founders and one share class. It gets risky once a company raises rounds, grants options to a growing team, and issues a SAFE or two: authorized-vs- issued counts per class, fully-diluted math across every option and convertible, and vesting schedules that change as time passes and people leave all have to stay correct at once, by hand, every time something changes. A broken formula or a stale number doesn't announce itself; it quietly produces the wrong ownership percentage or the wrong number feeding a later valuation or expense calculation.
How do you manage a cap table in practice?
Add stakeholders first, then define share classes with their authorized share counts through a corporate filing, then record transactions as they happen: original share issuances, option and RSU grants against a vesting template, SAFEs and convertible notes, and later their exercises, vesting, and conversions. The cap table view then lets you read ownership either by share class or by stakeholder, on an outstanding or fully-diluted basis.
Does the cap table feed other compliance and valuation work?
Yes. A 409A valuation allocates a company's equity value across the share classes recorded on the cap table. ASC 718 / IFRS 2 expense is calculated from the grants and vesting schedules recorded there. For Israeli employees, Section 102 compliance is tracked per grant on the same underlying data. In each case, the cap table is the system of record the later calculation reads from, not a separate data set that has to be kept in sync by hand.
Is the cap table a separate product from Value8 Ledger?
No. The cap table is the base data set: stakeholders, share classes, instruments, transactions, and vesting. Value8 Ledger is the accounting, tax, and compliance layer that sits on top of it, covering ASC 718 / IFRS 2 expense, equity tax forms, and securities compliance, without requiring any of that cap table data to be re-entered.
This is general information about cap table structure and terminology, not legal, tax, or accounting advice. Confirm specifics with your counsel or accountant.