Cap Tables 101: A Guide for First-Time Founders

When you start a company, you’re not just building a product; you’re building an equity story. One of the key tools for telling that story is your cap table.

At its core, a capitalisation table (cap table) shows who owns what in your startup. It tracks every share issued, every option granted, and every investment received. For first-time founders, understanding how to model and manage your cap table is crucial, not only to maintain clean records but also to negotiate effectively with investors, track dilution, and avoid costly surprises later.

You can also read Speedinvest's guide to investment terminology here.

What’s in a Capitalisation Table?

A well-structured cap table will include:

• Share classes (common vs. preferred)
• Ownership percentages
• Investment history
• Option pool (ESOP/VSOP)
• Debt or convertible instruments (like SAFEs or convertible notes)
• Valuation (pre- and post-money)
• Sequence of financing rounds

Think of it as your startup’s financial map that shows your company’s structure.

Why Cap Tables Matter Early On

Even at the pre-seed stage, you need to be factoring in:

• Founder dilution: Every new round affects your ownership. Many founders are surprised to learn that option pools are typically set before a new investment round, meaning their equity dilution is higher than expected if not modeled properly.
• Convertible instruments: These convert into equity, often at a discounted price, which impacts the total shareholding.
• Modelling future rounds: You’ll want to run scenarios to see how decisions today shape your ownership and growth tomorrow.

For more on dilution, read our in-depth blog on the subject.

Modeling SAFEs and Convertibles

These instruments are common in early-stage rounds and can be tricky to model.

• Convertible Notes include a loan amount, interest, cap/discount, and a maturity date. They convert into shares during a future round.
• SAFEs (Simple Agreements for Future Equity) are simpler: no interest or maturity, but they still convert at a discounted price or valuation cap.

In general, convertible instruments can convert either before or in the priced round. The method affects your share price calculation and dilution. Modelling these scenarios accurately is critical, especially when more than one is converting at once.

Founders’ Best Practices

When building your cap table:

• Use consistent currency and dating.
• Highlight manual inputs separately from formulas.
• Order events chronologically.
• Be clear about share classes and conversion logic.
• Include circular references and enable iterative calculations if needed.

When structuring rounds:

• Understand the timing and type of conversion.
• Model how ESOP/VSOP is topped up; this affects dilution.
• Communicate clearly with investors and advisors to avoid surprises.

Cap Tables Are a Superpower, Not Just a Spreadsheet

Cap tables aren’t just an investor tool; they’re your tool. The better you understand them, the more confident you’ll be in fundraising, hiring, and managing your startup’s growth. If you’re new to this, consider working with an investor or advisor to model different scenarios and understand the trade-offs. 

At Speedinvest, one of our funding partners, Werner Zahnt, developed a cap table modeling framework that we’ve found invaluable and continue to use today. We're now making it available for download! 

NOTE: You must download an Excel version of the model for full functionality.

If you’re a founder thinking about your next raise or need help modelling your cap table, we’d love to hear from you.

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