What Is a Cap Table?
A capitalization table tracks who owns what percentage of your company. It includes founders, employees (via stock options), investors, and any other equity holders. A clean cap table is essential for fundraising — messy ones scare investors away.
Founder Equity Splits
The most important cap table decision happens before you raise a single dollar: how to split equity among co-founders. Equal splits are common but not always right. Consider each founder's contribution, risk taken, opportunity cost, and future role. Whatever you decide, put it in writing with a vesting schedule.
Vesting: Protect Everyone
Standard vesting is 4 years with a 1-year cliff. This means if a co-founder leaves after 6 months, they don't walk away with a large chunk of equity. Even between friends, vesting is non-negotiable. Investors will insist on it, and it protects the company.
The Employee Option Pool
Before your first institutional round, you'll need to create an option pool — typically 10–20% of the company — for future employee grants. Investors usually want this pool created before their investment (meaning it dilutes founders, not investors). Size it based on your hiring plan for the next 18–24 months.
Common Cap Table Mistakes
- Too many investors at different valuations: Stacking SAFEs and notes at different caps creates confusion.
- Giving equity to advisors without vesting: Advisor equity should vest over 1–2 years with clear expectations.
- Not modeling dilution: Before every round, model how much dilution you'll take and what your ownership looks like through Series B.
- Losing track: Use a proper cap table tool, not a spreadsheet. Errors compound over time.
Keep It Clean
The simplest cap table is the best cap table. Fewer SAFEs, clear vesting schedules, and well-documented equity grants make fundraising smoother and reduce legal costs. Treat your cap table like your codebase — clean, well-documented, and version-controlled.