Founder explainer · 4 min read
Cap table explained: who owns what, round by round
A capitalisation table, or cap table, is the record of who owns what in a company: every share, option and convertible instrument, and who holds it. Founders use it to track their stake, and investors use it to set the price per share and work out how much of the company a new round buys.
By the StartupReader editorial desk · Updated 2026-10-28 · Worked examples are illustrative
Cap table
- Founder A's stake, founding to seed, in our example
- 60% → 30%
- seed price per share in our example
- ₹100
- option pool after seed in our example
- 12.5%
- fully diluted shares after seed in our example
- 20,00,000
What a cap table records
A simple cap table lists each holder in a row, with the class of security, the number of shares and the percentage owned. A fuller one also tracks:
- Each class of share, such as ordinary equity shares and the preference shares held by investors (in India, usually CCPS).
- Options granted to employees, and the unallocated part of the option pool.
- Convertible instruments not yet converted, such as SAFEs, convertible notes and warrants.
- The price and date of every issue, which you need for tax, valuations and due diligence.
Issued vs fully diluted
Issued shares are the shares that exist today. Fully diluted shares count everything that could become a share: issued shares, all options (granted or not) and convertible instruments as if they had converted.
The difference matters. If two founders hold 9,00,000 issued shares between them and the company has set aside a pool of 1,00,000 options, the founders own 100% of the issued shares but 9,00,000 ÷ 10,00,000 = 90% on a fully diluted basis. Investors usually price rounds and quote ownership on a fully diluted basis.
Worked example: founders to seed
Illustrative figures. Two founders start with 10,00,000 shares: Founder A holds 6,00,000 (60%) and Founder B 4,00,000 (40%).
Pre-seed: an angel invests ₹1 crore at a ₹4 crore pre-money valuation. The price per share is ₹4 crore ÷ 10,00,000 = ₹40, so ₹1 crore buys 2,50,000 new shares. There are now 12,50,000 shares, and the angel owns 2,50,000 ÷ 12,50,000 = 20%.
Seed: a fund invests ₹5 crore at a ₹15 crore pre-money valuation (₹20 crore post-money), on condition that an option pool of 2,50,000 shares is created before the round. The pre-money share count is 12,50,000 + 2,50,000 = 15,00,000, so the price is ₹15 crore ÷ 15,00,000 = ₹100 per share, and ₹5 crore buys 5,00,000 new shares. The total is now 20,00,000.
| Holder | Founding | After pre-seed | After seed |
|---|---|---|---|
| Founder A | 6,00,000 (60%) | 6,00,000 (48%) | 6,00,000 (30%) |
| Founder B | 4,00,000 (40%) | 4,00,000 (32%) | 4,00,000 (20%) |
| Pre-seed angel | – | 2,50,000 (20%) | 2,50,000 (12.5%) |
| Option pool | – | – | 2,50,000 (12.5%) |
| Seed fund | – | – | 5,00,000 (25%) |
| Total | 10,00,000 | 12,50,000 | 20,00,000 |
What the example shows
Nobody's share count falls, but everyone's percentage does as new shares are issued. Founder A goes from 60% to 48% to 30%, while the value of each share rises from ₹40 at pre-seed to ₹100 at seed, so A's 6,00,000 shares are worth ₹2.4 crore on paper after pre-seed and ₹6 crore after seed.
Because the option pool was counted in the pre-money, its 12.5% came entirely out of the founders' and the angel's stakes. The seed fund still gets 5,00,000 ÷ 20,00,000 = 25%.
Common mistakes
- Promising equity in emails or conversations without recording it, then finding the promises add up to more than planned.
- Leaving SAFEs, notes or promised options out of the fully diluted count, which overstates the founders' stake.
- Keeping several spreadsheet versions that disagree with each other and with the company's legal records.
- No vesting on founder shares, so a co-founder who leaves early keeps a large stake (often called dead equity).
- Selling a large share too early, which leaves too little room for later rounds and the option pool.
Tools and records
A spreadsheet is fine for the first few holders. As options and convertible instruments pile up, many startups move to cap table software, such as Carta or Pulley in the US, or Indian platforms such as Qapita and EquityList, which also handle ESOP grants and vesting.
Whatever the tool, the legal record comes first. In India that means the register of members, share allotment filings with the Registrar of Companies and the shareholder resolutions behind each issue. Reconcile the cap table with these before every round, because the investors' lawyers will.
Questions founders ask
What is a fully diluted cap table?
One that counts every share that could exist: issued shares, all granted and ungranted options in the pool, and convertible instruments such as SAFEs and notes as if they had converted. Investors usually price rounds on this basis.
Should the unallocated option pool be in the cap table?
Yes, on a fully diluted basis. Shares reserved for future hires will dilute existing holders when they are granted, so investors count them before setting the price.
How much dilution is normal in a funding round?
Each priced round commonly sells somewhere between 10% and 25% of the company, plus any increase to the option pool. The exact figure depends on the amount raised and the valuation.
Who maintains the cap table?
The company: usually a founder or finance lead at first, with lawyers checking it at each round. It must match the statutory records, such as the register of members, which are the legal record of ownership.
Do SAFEs and convertible notes appear on the cap table?
They should. Until they convert they are listed separately, and a pro forma version shows what the cap table will look like once they convert at the next priced round.
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Keep exploring
- ExplainerPre-money vs post-money valuation, with examples →Pre-money is what a startup is worth before new investment; post-money adds the new money. How to calculate both, investors' ownership and the option pool effect.
- ExplainerVesting, cliffs and ESOPs: how startup equity is earned →How vesting schedules and cliffs work for founders and employees, the standard four-year schedule, and the main rules for ESOPs in Indian startups.
- ExplainerLiquidation preference explained, with worked examples →A liquidation preference decides who gets paid first when a startup is sold. 1x non-participating vs participating, worked through at two exit prices.
- ExplainerSAFE vs convertible note: how they work and which to use →SAFEs and convertible notes both turn into equity later. Valuation caps, discounts, interest and maturity compared, with how early rounds are structured in India.
- CalculatorStartup dilution calculator →How much founders own after each round, including option pool top-ups.
- CalculatorSAFE conversion calculator →See whether a post-money SAFE converts at its valuation cap or discount in a priced round, and who owns what afterwards.
Written by the StartupReader editorial desk with AI assistance, from standard definitions and the examples worked through above; updated 2026-10-28. Rules on tax and foreign investment change, so check the official sources or an adviser before acting. Spotted something wrong? Tell us.