Educational only — not investment, legal or tax advice.
A cap table (capitalisation table) lists who owns what in your company: every share, option, warrant and convertible instrument. It is the first document an investor’s lawyer asks for, and the one that most often reveals problems. Founders should be able to read theirs fluently.
Outstanding vs fully diluted
- Outstanding shares are shares actually issued today.
- Fully diluted shares add everything that could become a share: granted options, the unallocated option pool, warrants, and SAFEs or notes as if they had converted.
Investors price rounds on a fully diluted basis. If you calculate your ownership on outstanding shares only, you will overestimate it.
Worked example: founding to Series A
Example, hypothetical numbers, simplified.
At founding: two founders split 10,000,000 shares equally. Each owns 50%.
Pre-seed: a $1M post-money SAFE at a $10M cap buys about 10%. Before the next round, fully diluted ownership is about founders 45% each, SAFE 10%.
Seed (priced): investors buy 20% of the company, and the round includes a new option pool of 10% of the post-money, created before the investment.
| Holder | After seed |
|---|---|
| Founder A | 31.5% |
| Founder B | 31.5% |
| Pre-seed SAFE (converted) | 7% |
| Option pool | 10% |
| Seed investors | 20% |
The arithmetic: the new investors and the new pool together take 30% of the company; the existing holders (founders and SAFE) share the remaining 70% in their old proportions, so each founder has 45% × 70% = 31.5%.
Series A: new investors buy another 20%. With no pool top-up, each founder falls to 31.5% × 80% = 25.2%. If the pool is topped up as part of the round, founders fall further. The next section shows how to run this calculation yourself.
How to calculate dilution
Every priced round follows the same three steps.
- Post-money valuation = pre-money valuation + amount raised.
- New investors’ stake = amount raised ÷ post-money valuation.
- Your new ownership = your old ownership × (1 − new investors’ stake − any new option pool created in the round).
Example, hypothetical numbers. You own 31.5%. You raise $2M at an $8M pre-money valuation.
- Post-money: $8M + $2M = $10M.
- Investors’ stake: $2M ÷ $10M = 20%.
- If the round also adds a new pool of 5% of the post-money, you keep 31.5% × (1 − 20% − 5%) = 31.5% × 75% ≈ 23.6%. Without the pool, you keep 31.5% × 80% = 25.2%.
Two things founders often miss: a pool created “pre-money” comes entirely out of existing holders, not the new investors, and SAFEs convert at the round, so they dilute you at the same time. Model both before you sign.
Typical founder ownership by round
Carta’s Founder Ownership Report 2026, based on rounds raised on Carta from 2021 through 2025, gives these medians for the whole founding team, on a fully diluted basis:
| Stage | Median founding team ownership |
|---|---|
| At the seed round | about 56% |
| At the Series A | 36% |
| At the Series B | 27.3% for AI founding teams, 21.8% for non-AI |
| At the Series C | 16.1% |
Carta also finds that by Series C the median employee equity pool (16.8%) is larger than the median founders’ stake. These are team totals: with two founders on an equal split, each owns about half of the figure shown. Use them as a benchmark, not a target.
What investors look for
- Everything reconciles. Totals match the company’s records, board approvals and the share register.
- No surprises. Undocumented promises of equity to early employees or advisers are a red flag. Paper them now.
- Founders still own enough to stay motivated. A cap table where founders have little left at Series A worries investors.
- Clean structure. Lots of small holders, dead equity (shares held by people no longer involved) or unusual instruments slow deals down.
Keep it healthy
- Use cap table software or a carefully maintained spreadsheet, and reconcile it after every grant and financing.
- Model each new SAFE or round before you sign. See SAFEs and dilution and the option pool shuffle.
- Keep founder vesting and 83(b) paperwork with it. See founder vesting.
From the investor’s side of the table
In the due diligence processes I have coordinated, the cap table is where small mistakes from years earlier surface. A founder who can walk through it confidently, line by line, earns trust immediately.
A startup I advised looked like a sure thing: one founder had already built and sold the same business in another market. But the CEO held 10% and the other founder 90%. “We’ve worked together forever, nothing will happen,” they told me. Then, in the middle of closing a round, they couldn’t agree, and the CEO walked out. Six months later, the company was gone, and the CEO went on to lead another startup. Founders always think the common mistakes won’t happen to them. They do.
The short version
Know your fully diluted ownership, model every financing before you sign, and keep every promise of equity on paper.
Sources
- Cooley GO glossary: Option pool
- Cooley GO glossary: SAFE
- Cooley GO glossary: Pre-money valuation
- Carta: Founder ownership report 2026 (12 March 2026)
Written by Fabian Cisneros. Educational only — not investment, legal or tax advice. See the full disclaimer.
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