Cap table

What is a cap table?

A cap table is the record of who owns what share of the company. It lists founders, investors and employees, the class of each holding (common or preferred), option grants, and instruments such as SAFEs and convertible notes that will become shares later. Investors usually read it on a fully diluted basis, as if every option and convertible had turned into stock.

Why it matters to a revenue leader

The cap table decides who gets paid, and how much, when the company is sold. For a revenue leader holding equity, it shows what an option grant could be worth at different exit values once preferred investors are paid. It also shows how much room is left in the option pool to hire the sales team the plan requires.

A company has 10 million fully diluted shares. Founders hold 5 million, investors 3.5 million and the option pool 1.5 million, of which 600,000 are ungranted. A new CRO granted 200,000 options would hold 2% fully diluted, leaving 400,000 options for the sales hires in the plan.