A capitalization table (cap table) lists every shareholder and option holder in a company, how many shares or options each holds, what class of shares they are (common vs. preferred, which usually carry different rights), and what percentage of the company that represents. A proper cap table shows this on a fully diluted basis — meaning it counts not just shares already issued, but also the entire option pool set aside for future employees, even before those options are granted or exercised.

The cap table matters because every new funding round adds new rows (new investors) and changes every existing shareholder’s percentage, even if the dollar value of their stake goes up. Investors scrutinize the cap table closely during due diligence, and a messy, inconsistent, or informally-tracked cap table (verbal promises, undocumented advisor equity, forgotten option grants) is one of the most common reasons a promising deal stalls or falls apart entirely.

A nuance beginners often miss: the “ownership percentage” quoted casually in conversation is usually the fully diluted number, which is always lower than a founder’s current outstanding-shares percentage — the difference is exactly the size of the option pool and any convertible instruments still waiting to convert.

🇵🇭 Philippine Example

Philippine startups maintain cap tables reflecting share classes issued under the Revised Corporation Code, and any issuance or transfer of shares generally needs to be reflected in filings with the Securities and Exchange Commission. As in other markets, an inaccurate or informally-tracked cap table is a common red flag that comes up when a Philippine startup goes through due diligence for its first institutional round.

Related Terms