What is a cap table?
A cap table (capitalisation table) shows who owns what in a company — number of shares, ownership stakes, and share classes.
Why does it matter?
When new shares are issued in a funding round, existing owners' percentage decreases. This is called dilution.
Example
If you own 10% and the company issues 20% new shares, your stake drops to about 8.3%. Your stake has been diluted — but if the company is valued higher, your holding could still be worth more.
What to look for
- Share classes — A-shares often carry more voting rights. B-shares are most common among investors.
- Option pool — Shares reserved for employees. A large pool may mean future dilution.
- Liquidation preference — Certain share classes have the right to be paid first in a sale.
Summary
Understand the cap table before investing. It determines your actual stake and how it can change in the future.