A capitalization table lists all shareholders, their ownership percentages, equity types, and dilution through rounds. It is the official record of who owns your company. Accuracy is legally and financially critical.

Should I use Carta or a spreadsheet?

Spreadsheets work initially but become error-prone as complexity grows. Carta or Pulley provide accuracy, legal document generation, and 409A valuations. Switch before your first option grants.

What is a 409A valuation?

A 409A is an independent appraisal of your company's fair market value for stock option pricing. Required annually or after significant events. Underpricing options without a 409A creates tax problems.

How much equity should I set aside for employees?

Typically 10-20% for the option pool, depending on hiring plans. Investors may want you to expand the pool before they invest (diluting only founders). Plan ahead for key hires.

What are common equity mistakes to avoid?

Not vesting founder shares, missing 83(b) elections, issuing options without 409A, poor record-keeping, over-promising equity verbally, and not understanding fully diluted ownership.

What is the difference between common and preferred stock?

Common stock goes to founders and employees. Preferred stock goes to investors with special rights (liquidation preference, anti-dilution, board seats). Preferred usually converts to common in an exit.

How does dilution work?

When you issue new shares (to investors, option pool), existing shareholders own a smaller percentage. A 20% investment means 20% dilution. Understand fully diluted ownership, including all convertible instruments.

What vesting schedule should I use?

Standard is 4-year vesting with 1-year cliff. After 1 year, 25% is vested, then monthly or quarterly thereafter. This structure is expected by investors and protects against early departures.

What happens to unvested equity when someone leaves?

Unvested equity is typically forfeited and returns to the pool. For options, employees usually have 90 days post-departure to exercise vested options (some companies extend this).

How do I model future funding rounds?

Cap table tools have scenario modeling. Input round size, valuation, and new option pool to see impact on ownership. Essential for negotiation and understanding dilution.

What documents do I need for equity grants?

Stock Incentive Plan, individual Stock Option Agreements or RSU agreements, Exercise Notices, and 409A valuation report. Cap table platforms generate these automatically.

What is a SAFE and how does it affect my cap table?

SAFEs convert to equity at a future priced round. They don't appear as ownership until conversion but affect dilution. Track SAFEs in your cap table tool to model conversion scenarios.

How often should I update my cap table?

After every equity event: new grants, exercises, forfeitures, funding rounds. Review quarterly for accuracy. Before fundraising, ensure it is completely up to date.

What is an option pool refresh?

When your option pool runs low, you may need to authorize more shares—a "refresh." This dilutes existing shareholders. Plan refreshes strategically, often as part of funding rounds.

Who should have access to the cap table?

Founders, CFO/finance lead, and legal counsel need full access. Employees typically see only their own grants. Investors see the full table during due diligence. Protect this sensitive information.

Back to all problems

Solution illustration for I need to manage my cap table and equity

Critical Priority

Best Cap Table Management & Equity Tools for Startups

Know exactly who owns what—mistakes here are expensive.

2-4 hours initial setup

Founder, Finance, Legal

About This Problem

Your cap table tracks who owns what in your company. As you issue equity to founders, employees, and investors, accurate cap table management prevents costly mistakes and legal issues.

You might have this problem if:

✓Using spreadsheets to track equity ownership
✓Issuing stock options to employees
✓Preparing for fundraise and need clean cap table
✓Multiple funding rounds making ownership complex

Success Looks Like

All equity grants recorded accurately
Option pool established for hiring
Scenario modeling for future rounds

Relevant For

launch stagegrowth stagescale stage

Cap table management for your startup becomes critical the moment you have co-founders, investors, or employees with equity. Spreadsheet cap tables break down fast when you add option pools, SAFEs, and multiple funding rounds. Dedicated cap table tools keep ownership accurate, model dilution scenarios, and generate the reports investors expect. Compare the best platforms trusted by thousands of funded startups.

Recommended Tools

4 tools that solve this problem

Carta

Equity management and cap table software.

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Pulley

Modern cap table management for startups.

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Capboard

Free cap table for European startups.

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AngelList

The platform for startup fundraising.

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Best Cap Table Management & Equity Tools for Startups