Cap Table Example: How to Build One With Templates
This guide walks through a real cap table example for every stage a startup will ever sit at, from a clean two-founder split on day one to a pre-IPO stack with eight rounds, three option pools, and a liquidation waterfall that takes a spreadsheet 90 rows to resolve. We picked apart the math the way a sell-side banker does in diligence, with screenshots, formulas, and downloadable templates pulled from Carta, Pulley, and the Wall Street Prep educational library, plus the Y Combinator post-money SAFE documents and NVCA Model Legal Documents that govern almost every venture-backed cap table in the United States.
What a Cap Table Example Shows
A capitalization table is the single source of truth for who owns what slice of a company, what they paid for it, and what they get when a check clears at exit. A clean cap table example does four things at once: it lists every security holder, it shows the security type each holds, it states the number of shares (or share equivalents) outstanding, and it derives an ownership percentage on both an issued and fully diluted basis. Everything else, vesting schedules, option pools, liquidation preferences, anti-dilution ratchets, is a layer added on top of that base structure.
The reason founders and operators get this wrong is that a cap table is not a snapshot, it is an event log. Every issuance, every transfer, every option grant, every SAFE conversion shifts the percentages, and the file has to reconcile back to the corporate ledger maintained by the company’s stock administrator (typically Carta, Pulley, Shareworks by Morgan Stanley, or for very early companies, a Google Sheet). When a banker or buyer asks for the cap table during a sale process, they are not asking for a screenshot of today, they are asking for the ledger plus every supporting document, stock purchase agreements, board consents, option grant notices, and SAFE post-money agreements, that justifies every line.
The Wall Street Prep teaching example uses a clean three-party setup (founder, angel, Series A VC at $10 million post-money on a $1 million check) to ground the math, and most teaching cap tables follow the same arc. We will build through four progressively harder cap table examples below, each one adding the next layer of real-world complexity: option pool, convertible securities, preferred stock with preference stack, and finally a fully diluted pre-IPO ledger. By the end you will be able to read any data room cap table and tell the banker exactly what is wrong with it.
The Three Cap Table Structures: Pre-Seed, Series A, Pre-IPO
A pre-seed cap table almost always has three line items: two founders and an unallocated option pool. There is no preferred stock, no convertible debt, and no investor on the ledger yet. The two founders own 100 percent of the common stock (typically 5 to 10 million authorized shares, with 8 to 9 million issued and the remainder reserved for the option pool). Vesting is governed by Restricted Stock Purchase Agreements with a four-year vest and one-year cliff, and the founders should have filed an IRS Section 83(b) election within 30 days of the grant. Cooley GO’s restricted stock purchase template is the most widely used form factor for this stage.
A Series A cap table is materially more complex. By the time a startup closes a priced round, the ledger typically includes founder common stock (now subject to a four-year vest with a portion already vested), an option pool of 10 to 20 percent of fully diluted shares, between $1 million and $5 million of SAFEs or convertible notes from the seed round (now converting into a new Seed Preferred or Series A-1 class), and the new Series A Preferred stock from the priced lead. Each preferred class has its own liquidation preference (1x non-participating is market), anti-dilution provision (broad-based weighted average is market), and protective provisions tracked in the NVCA Model Voting Agreement and Stockholders Agreement. A Series A cap table example will typically run to 30-50 line items.
A pre-IPO cap table is where the file becomes a real document. By the time a company is filing an S-1, the ledger includes founder common, multiple option pool expansions, between three and eight preferred classes (Seed Preferred, Series A, Series B, Series C, Series D, sometimes a Series E and growth-round pre-IPO bridge), warrants issued to venture debt lenders, RSUs granted to executives, sometimes a secondary tender offer that bought back early holders, and an ESPP plan reservation. The fully diluted share count is typically 200 to 400 million shares, and the cap table file itself can be 200 to 600 rows long. The SEC EDGAR S-1 filings show the public version of what these ledgers look like once a company crosses into IPO range, and any banker will tell you that the data room cap table will be the most-read file in the entire process.
The Cap Table Example Building Blocks: Common, Preferred, Options, SAFEs
Every cap table example is assembled from five primitives: common stock, preferred stock, stock options (ISOs and NSOs), restricted stock units (RSUs), and convertible instruments (SAFEs and convertible notes). Founders and employees almost always hold common stock or options on common. Investors almost always hold preferred stock. The convertible instruments sit in a separate bucket until they convert into preferred at the next priced round.
Common stock is the residual claim on the company, the security that the founders form the corporation with, and the security that gets created when an option is exercised. The default authorized common pool is 10 million shares at incorporation, of which roughly 80 percent is issued to founders and 20 percent is reserved for the future option pool. Preferred stock is a separate class with contractual rights, typically a liquidation preference (the right to take money out first at exit), a conversion right (the right to convert into common at any time), anti-dilution protection (the right to repricing if a future round is at a lower price), and protective provisions (the right to veto certain board and corporate actions). NVCA Model Certificate of Incorporation is the standard reference for what preferred stock terms look like in a venture-backed company.
Stock options are contracts that give the holder the right to buy common stock at a fixed strike price for a fixed period. Incentive Stock Options (ISOs) get favorable tax treatment under IRC Section 422 but are capped at $100,000 of strike value vesting per year per employee. Non-qualified Stock Options (NSOs) have no cap and are used for advisors, board members, and contractors. The strike price is set by a 409A valuation, which is a third-party fair market value report that the IRS requires for all option grants. RSUs are direct grants of common stock subject to vesting, with no strike price, and they are used at later stages where the 409A value has grown to a point where options are no longer attractive (a common rule of thumb: shift from options to RSUs when the company is worth more than $1 billion).
SAFEs and convertible notes are the convertible instruments. A SAFE is a Simple Agreement for Future Equity, introduced by Y Combinator in 2013 and rewritten in 2018 to use the post-money variant. A SAFE has a valuation cap, sometimes a discount rate, and converts into preferred stock at the next priced round. A convertible note is a debt instrument with an interest rate (typically 4 to 8 percent), a maturity date (typically 18 to 24 months), a valuation cap, and a discount rate. Both convert into preferred at the next priced round, but a note accrues interest and has to be repaid or converted before maturity. Most early-stage rounds in 2026 are done on post-money SAFEs because the math is cleaner for both sides.
Cap Table Example 1: Two-Founder Bootstrapped Startup
The simplest cap table example is two founders splitting equity at incorporation. Assume the company is a Delaware C-corporation with 10,000,000 authorized common shares. The founders, Alice and Bob, agree to a 60/40 split (because Alice is taking on the CEO role and committed full-time three months earlier than Bob). They issue 8,000,000 shares of common stock at $0.0001 per share, with Alice taking 4,800,000 and Bob taking 3,200,000. Both grants are subject to a four-year vest with a one-year cliff, governed by Restricted Stock Purchase Agreements drafted from the Cooley GO template. Both founders file their 83(b) elections with the IRS within 30 days. The remaining 2,000,000 authorized shares are reserved for a future option pool, not yet issued.
The cap table at this point has two line items on an issued basis: Alice with 4,800,000 shares (60 percent) and Bob with 3,200,000 shares (40 percent). On a fully diluted basis (which counts the unissued option pool as if it were issued), Alice owns 48 percent, Bob owns 32 percent, and the option pool reserve accounts for 20 percent. The file is two rows long, the value of the company is whatever the founders are willing to argue for (typically par value, $0.0001 per share times 8,000,000 issued = $800), and there is no preferred stock, no liquidation preference, and no investor on the ledger.
The mistake we see most often at this stage is founders splitting equity 50/50 when one of them committed earlier or is taking on more risk. Wharton research from Noam Wasserman shows that founder teams with equal splits underperform teams with negotiated splits, because an equal split signals that the founders did not have the hard conversation about commitment and contribution upfront. The second most common mistake is forgetting to file the 83(b) election within 30 days, which forces the founder to pay ordinary income tax on the spread between the strike price and the fair market value as the stock vests, a tax bill that can run to seven figures by Series B.
Cap Table Example 2: Founder + Seed Round With Convertible Notes
The same company, 18 months later, has raised a seed round. The founders did $1,500,000 of post-money SAFEs at a $10,000,000 valuation cap from a syndicate of angels and seed funds, plus a $500,000 convertible note from a strategic investor at an $8,000,000 cap with a 20 percent discount. They have also hired their first six employees and granted options on 800,000 shares from the option pool (8 percent of fully diluted, with the remaining 12 percent of the original 20 percent pool still unissued).
The cap table is now four buckets: founder common stock (8,000,000 shares, 80 percent of issued), issued options to employees (800,000 shares, 8 percent of issued, 8 percent of fully diluted), unissued option pool (1,200,000 shares, 12 percent of fully diluted), and the convertible securities (SAFEs and the note, which do not yet have a share count). The SAFEs and note do not appear on the issued cap table yet, because they have not converted. They appear on the pro forma cap table, which models what happens when they convert at the next priced round. Carta’s convertible securities calculator is the most-used tool for modeling this conversion.
On a pro forma basis (assuming the SAFEs convert at the cap, the note converts at the discount, and a $5,000,000 Series A is raised at a $20,000,000 pre-money valuation), the math works like this. The $1,500,000 of SAFEs at a $10 million cap convert at $1.25 per share (assuming 8 million fully diluted pre-conversion), yielding 1,500,000 / 1.25 = 1,200,000 new Series A-1 shares. The $500,000 note converts at the lower of the cap-implied price ($1.00 per share at the $8M cap) or the discounted Series A price ($2.00 Series A price times 80 percent = $1.60 per share), so the note converts at $1.00 per share, yielding 500,000 new Series A-1 shares. The Series A lead writes a $5 million check at $2.00 per share, taking 2,500,000 new Series A shares. Post-money fully diluted is 8,000,000 + 800,000 + 1,200,000 + 1,200,000 + 500,000 + 2,500,000 = 14,200,000 shares, founders own 56 percent, employees own 6 percent, option pool reserve is 9 percent, SAFEs and note holders own 12 percent, and the Series A lead owns 18 percent.
The pedagogical point is that SAFEs and notes always look cheaper than they actually are, because the conversion math is back-loaded. A founder who raises $2 million of SAFEs at a $10 million cap is selling 20 percent of the post-money company, but the dilution does not show up on the cap table until the priced round closes. The Y Combinator Startup Library has a clear explainer on this, and any founder who is raising on SAFEs should model the pro forma cap table at every cap they consider before signing the documents.
Cap Table Example 3: Series A With Preferred Stock Liquidation Preference
The same company, post-Series A, now has a real preferred stock stack to manage. The Series A lead bought 2,500,000 shares of Series A Preferred at $2.00 per share for a total investment of $5,000,000. The Series A Preferred has a 1x non-participating liquidation preference, meaning at exit the holder either takes $5,000,000 off the top (the 1x preference) or converts to common and takes their pro rata share of the proceeds, whichever is higher. The seed converters (SAFEs and notes) hold Series A-1 Preferred, also with a 1x non-participating preference, on a total invested basis of $2,000,000.
The cap table now has six security classes: founder common, employee options, option pool reserve, Series A-1 Preferred (the converted seed instruments), Series A Preferred (the new lead), and the unissued option pool. At a $50 million exit, the waterfall works like this. The Series A preference takes $5,000,000 off the top. The Series A-1 preference takes $2,000,000 off the top. The remaining $43,000,000 is distributed pro rata to common (founders, employees) and to the preferred holders if they convert (the preferred will convert at any exit above roughly $30 million in this structure, because the pro rata conversion is worth more than the 1x preference). So at $50 million, the Series A lead converts and takes 18 percent of $50 million = $9 million (versus $5 million if they held the preference), the Series A-1 converts and takes 12 percent of $50 million = $6 million (versus $2 million if they held the preference), and the common holders take the remaining $35 million pro rata.
At a $10 million downside exit, the waterfall flips. The Series A preference takes $5 million off the top. The Series A-1 preference takes $2 million off the top. The remaining $3 million goes to common pro rata, which means founders take roughly $2.4 million and employees take roughly $600,000. The preferred holders take their preference (because converting to common would yield less than $5 million and $2 million, respectively). The point is that a 1x non-participating liquidation preference is founder-friendly in upside scenarios (the preferred converts and takes pro rata) and investor-friendly in downside scenarios (the preferred holds the preference and takes their money out first). Wilson Sonsini’s founder-friendly term documentation walks through the conversion-vs-preference decision in detail.
Cap Table Example 4: Pre-IPO Multi-Round Stack
By the time the same company is ready to file an S-1, the cap table has expanded to eight preferred classes plus common, options, and RSUs. The ledger now reads: founder common stock (now substantially vested, with some founders having sold portions in secondary tenders), the original option pool plus three expansions (Series A pool top-up, Series C pool top-up, pre-IPO RSU pool), Series Seed Preferred (the converted SAFEs and notes), Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, and a pre-IPO convertible note bridge. Each preferred class has its own liquidation preference, anti-dilution provisions, and conversion ratio (which may have been adjusted by prior down-round repricings).
The fully diluted share count is now in the range of 200 million to 350 million shares (assuming forward stock splits at Series B and Series D to keep the strike price of options manageable). The cap table file is 400 to 600 rows long, and the company’s stock administrator (almost always Carta or Shareworks at this stage) maintains a full audit trail on every grant, transfer, and exercise. The S-1 filing will publish a summary version of this cap table in the prospectus, and the SEC’s EDGAR archive of recent S-1 filings (search any 2024-2026 IPO on SEC EDGAR) shows what the public version looks like.
The pedagogical lesson at this stage is the preference stack. If the company has raised a total of $400 million across eight preferred rounds at increasing prices per share, and the most recent round (the pre-IPO Series E) was done at a $4 billion post-money valuation with a 1x non-participating preference, then the total preference overhang is $400 million, and any exit below $400 million will leave common holders with nothing. Aswath Damodaran’s NYU Stern equity valuation database includes data on liquidation preference overhangs across venture-backed companies, and the data show that roughly 20 percent of venture-backed exits in 2024 returned less than the total preference stack, meaning common holders (founders and employees) got nothing.
Fully Diluted vs Outstanding Shares: The Math
Every cap table has two share counts that matter: outstanding shares (the shares that have been issued and are held by someone) and fully diluted shares (outstanding shares plus all securities that could be converted into common, including options, warrants, RSUs, and convertible instruments). The difference between the two determines what percentage a new investor is buying, because new investors almost always negotiate their ownership on a fully diluted basis.
The formula is straightforward. Fully diluted shares = outstanding common + outstanding preferred (on an as-converted basis) + all issued options (whether vested or not) + all RSUs (whether vested or not) + all warrants + all convertible securities (SAFEs and notes on an as-converted basis) + all unissued option pool reserve. Outstanding shares is the same calculation but excluding the unissued option pool reserve and excluding unvested options and RSUs that have not yet been exercised or settled. A new investor’s percentage = new investor shares / (fully diluted shares post-investment).
The reason this matters is that founders and existing investors often quote ownership on an outstanding basis (because it looks bigger), while new investors quote ownership on a fully diluted basis (because it accounts for future dilution from the option pool). The difference can be 15 to 25 percent at Series A and gets bigger with every round. A cap table example that does not clearly distinguish between the two will fail a banker’s due diligence in the first ten minutes. Wall Street Prep’s capitalization table guide has the cleanest worked example of the outstanding-vs-fully-diluted math.
Option Pool Math: Pre-Money vs Post-Money Treatment
The single most expensive line item a founder negotiates at a priced round is the option pool top-up, and almost every founder gets the math wrong. The mechanic is that the lead investor will require the company to expand the option pool to a target percentage (typically 10 to 20 percent of post-money fully diluted) before the round closes. Because the pool is created pre-money, the dilution from the pool top-up comes entirely out of the existing shareholders (founders and prior investors), not out of the new lead investor.
Consider a $20 million pre-money, $5 million round, $25 million post-money valuation. If the target option pool is 15 percent of post-money fully diluted, and the current option pool reserve is 8 percent of pre-money fully diluted, then the pre-money has to expand the pool by enough to land at 15 percent post-money. The math: target pool shares = 0.15 times post-money fully diluted. Post-money fully diluted = pre-money fully diluted + new investor shares. Solve simultaneously and the pre-money option pool has to expand from 8 percent to roughly 18 percent of pre-money fully diluted. That additional 10 percentage points of dilution comes out of the founders’ and existing investors’ percentages, not the lead’s.
The way to negotiate against this is to argue that the option pool top-up should be split between pre-money and post-money, or that the target pool size should be based on the actual hiring plan for the next 18 months rather than a market-standard 15 percent. Cooley GO’s option pool shuffle explainer walks through the negotiation in detail, and any founder going into a Series A should model the pre-money option pool dilution before they sign the term sheet. The cap table example for this calculation is included in the Pulley free cap table template and most modern cap table software has a built-in option pool modeler.
SAFE Conversion: How Y Combinator SAFEs Hit the Cap Table
The post-money SAFE introduced by Y Combinator in 2018 is now the dominant early-stage instrument, and its conversion math is materially different from the original pre-money SAFE. A post-money SAFE locks the investor’s ownership percentage at signing, calculated as SAFE investment divided by the post-money valuation cap. So a $500,000 post-money SAFE at a $10 million cap locks in 5 percent of the post-money company, regardless of how much additional SAFE is raised afterward. The founder bears all dilution from subsequent SAFEs.
The conversion math at the next priced round works like this. Assume the company raises $2,000,000 of post-money SAFEs at a $10,000,000 cap, then closes a Series A at a $20 million pre-money. The SAFEs convert into Seed Preferred (or Series A-1) at a conversion price equal to the cap divided by the company capitalization, where the capitalization is defined in the SAFE document as outstanding common plus all issued options plus the unissued option pool reserve, but excluding the SAFEs themselves and any subsequent SAFEs. So if the company capitalization is 9,000,000 shares pre-conversion, the conversion price is $10,000,000 / 9,000,000 = $1.11 per share, and the $2,000,000 of SAFEs converts into 1,800,000 shares of Series A-1 Preferred. The Series A lead’s percentage is computed on the post-conversion, post-SAFE, post-option-pool-top-up fully diluted share count.
The reason this is so important on a cap table example is that the SAFE holders typically get a different preference than the new Series A lead. A common structure is that the Series A-1 (converted SAFEs) gets a 1x non-participating preference at the original SAFE investment amount, while the Series A gets a 1x non-participating preference at the Series A investment amount. The total preference stack is the sum of both, and the conversion-vs-preference math has to be run for both classes at every exit scenario. The Y Combinator SAFE document library includes the post-money SAFE template and the side letter MFN (most favored nation) variant that controls how subsequent SAFEs interact.
Liquidation Preference Cap Table Example (1x, 2x, Participating)
The liquidation preference is the contractual right of preferred stockholders to take money out of an exit before common holders. A 1x non-participating preference is the market standard: the preferred holder either takes their preference (1x the original investment) or converts to common and takes pro rata, whichever is higher. A 2x non-participating preference (rare since roughly 2020, but common in 2008-2012 down rounds) is 2x the original investment. A 1x participating preference is the most aggressive: the preferred holder takes their preference plus their pro rata share of the remaining proceeds, effectively double-dipping. Participating preferences are usually capped at a multiple (e.g., 1x participating capped at 3x), at which point the preferred holder is forced to convert.
The cap table example for a participating preference looks like this. A company has $50 million of preferred stock with a 1x participating preference (uncapped) and 50 million common shares outstanding. At a $200 million exit, the preferred takes its $50 million preference off the top, then participates in the remaining $150 million pro rata. If the preferred owns 30 percent on an as-converted basis, the preferred takes $50 million + 30 percent of $150 million = $50 million + $45 million = $95 million. Common takes 70 percent of $150 million = $105 million. Compare to a 1x non-participating preference, where the preferred would convert and take 30 percent of $200 million = $60 million, and common would take 70 percent of $200 million = $140 million. The participating preference costs common holders $35 million on this exit.
The reason 1x non-participating became market standard after 2014 is that the NVCA Model Certificate of Incorporation, which is the reference document for most venture-backed companies, defaults to non-participating, and most institutional VCs do not push for participating preferences in primary rounds. Participating preferences still show up in distressed financings, in growth rounds done off the back of a down-round, and in some strategic investments where the strategic is being compensated for taking on operating risk. NVCA Model Certificate of Incorporation is the canonical reference, and any cap table example that includes preferred stock should explicitly state the preference type and any participation cap.
Anti-Dilution Adjustments: Full Ratchet vs Weighted Average
Anti-dilution protection is the second contractual right preferred stockholders typically negotiate. The mechanic is that if the company raises a future round at a price per share lower than the original purchase price (a “down round”), the conversion ratio of the original preferred adjusts so that the original preferred holder gets more common shares on conversion, effectively compensating them for the down round. There are two common structures: full ratchet and broad-based weighted average.
Full ratchet anti-dilution resets the conversion price of the original preferred to the new (lower) round price. If a Series A was done at $2.00 per share and the Series B is done at $1.00 per share, then a full ratchet adjusts the Series A conversion price to $1.00 per share, doubling the number of common shares the Series A holders get on conversion. Full ratchet is brutal for founders and is now rare in primary venture rounds, but it shows up in some growth and bridge financings. Broad-based weighted average anti-dilution adjusts the conversion price based on the size of the down round relative to the company’s total capitalization, using the formula: New CP = Old CP times (A + B) / (A + C), where A is the pre-down-round outstanding shares on an as-converted basis, B is the dollars raised in the down round divided by the old conversion price, and C is the dollars raised in the down round divided by the new (lower) issue price.
The cap table example for a broad-based weighted average adjustment shows that the conversion price moves a fraction of the way from the old CP to the new CP, depending on how much was raised in the down round. If a Series A was done at $2.00 per share, and the Series B is a $5 million round at $1.00 per share with 10 million shares outstanding on an as-converted basis pre-Series B, then New CP = $2.00 times (10,000,000 + 2,500,000) / (10,000,000 + 5,000,000) = $2.00 times 12,500,000 / 15,000,000 = $1.67 per share. The Series A conversion price moves from $2.00 to $1.67, a 16.5 percent adjustment, far less punitive than the full ratchet outcome. Broad-based weighted average is now market standard for primary venture rounds and is the default in the NVCA Model Certificate of Incorporation.
Cap Table Software: Carta vs Pulley vs Excel
The default tooling decision for any startup is whether to maintain the cap table in a spreadsheet or in dedicated cap table software. The spreadsheet approach is fine for the first 12 to 18 months (one or two founders, an unallocated option pool, maybe a few angel SAFEs), and the Pulley free template and the Carta free template are both well-engineered Google Sheets builds. Once the company has more than three or four security classes or more than ten employees with option grants, the spreadsheet becomes a liability, because every option grant requires a 409A valuation, every issuance requires a board consent, and every transfer requires the secretary to update the corporate ledger. Doing this in a spreadsheet at scale produces audit failures.
Carta is the market leader in cap table software with roughly 40,000 companies on the platform as of 2026, and it bundles cap table management with 409A valuations, ASC 718 expense reporting, fund administration for venture funds, and a secondary marketplace for employee liquidity. Pulley is the founder-friendly alternative, with a lower price point at the early stages, free for companies with fewer than 25 stakeholders, and a cleaner user interface for the cap table modeler. Shareworks by Morgan Stanley is the late-stage and public company choice, with a focus on RSU administration, ESPP plans, and post-IPO compliance reporting. AngelList equity tools are an emerging option for SAFE-stage companies that are also using AngelList for syndicate management.
The decision typically goes: free spreadsheet at incorporation, Pulley or Carta after the seed round, Carta or Shareworks after Series B, and Shareworks or a multi-platform stack pre-IPO. The cost of migrating between platforms is substantial (a Carta-to-Pulley migration is roughly a 4 to 6 week project for a Series B-stage company), so the platform choice at Series A is one of the more expensive vendor decisions a startup makes. The Carta cap table learning center and the Pulley blog both publish migration guides and feature comparisons.
Cap Table Mistakes That Kill M&A Deals
When a company runs a sell-side process, the cap table is one of the first three files the buyer’s diligence team will pull, alongside the financials and the customer contracts. A clean cap table moves the deal forward. A broken cap table can kill the deal or, more commonly, knock 5 to 15 percent off the price as the buyer reserves for unknown liabilities. The most common mistakes we see in sell-side diligence at letter of intent stage are predictable.
The first mistake is missing 83(b) elections. If a founder forgot to file the 83(b) within 30 days of the original restricted stock purchase, the IRS treats the stock as vesting income, taxable at ordinary rates as it vests. By Series B, this can be a multi-million-dollar tax liability that the buyer will require an indemnity for. The second mistake is improperly granted options, typically options granted without a contemporaneous 409A valuation or with a strike price below fair market value. This creates a Section 409A penalty exposure that can be 20 percent of the option spread plus interest, and the buyer will require an escrow or holdback. The third mistake is missing board consents. Every option grant, every issuance, every transfer requires a board consent, and missing consents create voidable grants that the buyer’s lawyers will require to be ratified before close.
The fourth mistake is undisclosed side letters. Side letters with investors (information rights, MFN clauses, pro rata rights) need to be disclosed and accounted for in the cap table example, because the buyer will need to either honor them, terminate them, or buy them out. The fifth mistake is option pool over-allocation, where the company granted more options than were authorized in the option pool, creating phantom grants that need to be cleaned up before close. The sixth mistake is unconverted SAFEs, where SAFEs from the seed round were never properly converted at the Series A and are still outstanding as separate instruments. A clean cap table is a precondition to a clean valuation, and any seller who is 12 to 18 months from a sale process should do a full cap table audit with their corporate counsel before the first banker meeting.
How CT Acquisitions Reviews Cap Tables in Sell-Side Mandates
At CT Acquisitions, the cap table review is one of the first three diligence workstreams we run when we take on a sell-side mandate. The review typically takes two to four weeks for a Series A to Series C company and four to eight weeks for a pre-IPO company. We pull the current cap table from the company’s stock administrator (Carta, Pulley, or Shareworks), reconcile it back to every supporting document (stock purchase agreements, option grant notices, board consents, SAFE documents, convertible notes, side letters, secondary transfer agreements), and produce a reconciled cap table that ties to the corporate ledger to the share level.
We then run the pro forma cap table at multiple exit valuations, modeling the full liquidation waterfall including all preference stacks, participation rights, and as-converted decisions. We produce an exit proceeds table showing what each shareholder receives at each exit value, which is the document we share with the seller and use as the basis for setting the floor price for the sale process. For sellers running a sale at a value below the preference stack, this is a hard conversation, and we have it early so that the seller’s expectations are calibrated before the data room opens. The cap table example we produce is the same document the buyer’s diligence team will see, just with our reconciliation and pro forma modeling already done, which compresses the buyer’s diligence timeline by two to four weeks and reduces the price chip exposure materially.
This work sits alongside our enterprise value to equity value bridge analysis, our LBO modeling for financial buyers, our football field valuation chart, and our broader sell-side process. The cap table is the foundation of every other valuation analysis we do, because the cap table determines who actually gets the proceeds, and the football field determines what those proceeds will be. For founders thinking about a sale, the cap table audit is the cheapest insurance policy you can buy against a broken process, and it should be done before the first banker meeting, not after the buyer’s lawyers ask for it. Read more about how business acquisitions actually work and the private equity analyst career path that produces the buy-side diligence teams who will be reading your cap table.
Cap Table Example: Frequently Asked Questions
What is a cap table in simple terms?
A cap table is a spreadsheet (or, increasingly, a software database) that lists every owner of a company, the type of security they own (common stock, preferred stock, options, RSUs, SAFEs, or convertible notes), the number of shares or share equivalents they hold, and the percentage of the company that represents on both an issued and fully diluted basis. At incorporation, a cap table is two or three rows. At pre-IPO, it can be 400 to 600 rows with eight or more preferred classes.
How do I build a cap table from scratch?
Start with the founder common stock issuance at incorporation, listing each founder, the number of shares, and the price per share (typically $0.0001 par value). Add the option pool reserve as a separate line. Then add each subsequent issuance in chronological order: option grants, SAFEs, convertible notes, priced round preferred stock, RSUs, warrants. After every issuance, recalculate the fully diluted share count and ownership percentages. Use a free template from Pulley, Carta, or Wall Street Prep as a starting point.
What is the difference between outstanding shares and fully diluted shares on a cap table example?
Outstanding shares are the shares that have been issued and are held by a shareholder. Fully diluted shares are outstanding shares plus all securities that could be converted into common stock, including issued options (vested and unvested), RSUs, warrants, convertible notes, SAFEs, and the unissued option pool reserve. The fully diluted count is always larger than the outstanding count, and new investors typically negotiate ownership on a fully diluted basis.
How does a SAFE convert on the cap table?
A post-money SAFE converts into preferred stock at the next priced round at a conversion price equal to the SAFE valuation cap divided by the company capitalization (defined in the SAFE document as outstanding common plus issued options plus the unissued option pool, but excluding the SAFEs themselves). The number of shares the SAFE holder gets is the SAFE investment amount divided by the conversion price. The Y Combinator SAFE document library includes the post-money SAFE template and conversion mechanics.
What is a 1x non-participating liquidation preference on a cap table?
A 1x non-participating liquidation preference gives the preferred holder the right to take either 1x their original investment off the top at exit, or to convert to common stock and take their pro rata share, whichever is higher. At exits above the preference threshold (where pro rata is worth more than the preference), the preferred converts and takes pro rata. At exits below the threshold, the preferred holds the preference and takes their money out first, leaving less for common. 1x non-participating is the market standard for primary venture rounds.
What does a pre-money option pool top-up cost the founders?
The pre-money option pool top-up is paid entirely by existing shareholders, because the pool is created before the new round closes. If a $20 million pre-money round requires the option pool to expand from 8 percent to 18 percent of pre-money fully diluted, the founders and existing investors are diluted by the additional 10 percentage points. Modeling this carefully before signing the term sheet is the most important math a founder does at a priced round.
What is the difference between full ratchet and weighted average anti-dilution?
Full ratchet anti-dilution resets the original preferred’s conversion price to the new (lower) round price, dramatically increasing the number of common shares the original preferred gets on conversion. Broad-based weighted average anti-dilution adjusts the conversion price proportionally to the size of the down round, using a formula that depends on total capitalization. Broad-based weighted average is the market standard and the default in the NVCA Model Certificate of Incorporation; full ratchet shows up only in distressed or down-round financings.
Do I need cap table software or is a spreadsheet enough?
A spreadsheet is fine for the first 12 to 18 months, while the company has fewer than three security classes and fewer than ten optionholders. Beyond that, dedicated cap table software (Carta, Pulley, or Shareworks) is materially less risky, because the software handles 409A valuations, board consent tracking, and ASC 718 expense reporting that are hard to do correctly in a spreadsheet. Most companies move off spreadsheets after the seed round.
What does a cap table example look like at a Series A?
A Series A cap table example typically has 30 to 50 line items, organized in six buckets: founder common stock, employee options (vested and unvested), unissued option pool reserve, converted SAFE/note instruments (now Series A-1 Preferred), Series A Preferred (the new lead round), and any warrants. Total fully diluted shares are usually 12 to 18 million, founder ownership is 50 to 65 percent fully diluted, and the option pool is 10 to 20 percent fully diluted.
Where can I find real cap table examples from public companies?
The SEC EDGAR archive includes the S-1 filings from every recent IPO, and the S-1 prospectus includes a summary of the pre-IPO cap table including all preferred classes and their preferences. Search for recent IPOs (any 2024-2026 venture-backed listing) and look at the “Description of Capital Stock” section of the S-1 prospectus for the most-detailed public cap table examples available.