Cap Table

Cap Table (Capitalization Table) is a record that shows who owns what percentage of a company, broken down by every class of security — founder ordinary equity shares, investor CCPS by funding round, ESOP grants (vested and unvested), convertible notes, SAFEs, and warrants. It is updated at every funding round, ESOP grant or exercise, secondary transfer, or convertible instrument conversion. The cap table is the source of truth for dilution calculations, exit waterfall modelling, and investor reporting.

Who it applies to

• Founders tracking their ownership as the company raises successive rounds
• Investors evaluating their equity percentage and what happens to it in future rounds
• Employees assessing the value of an ESOP offer relative to the company's capitalisation
• Acquirers and bankers calculating exit distributions in a trade sale or IPO

Fully diluted vs. basic cap table

A cap table has two views:

Issued (basic) cap table: Only currently outstanding ordinary equity shares. Understates total potential dilution and is not the view investors use.

Fully diluted cap table: All currently outstanding shares plus all potential equity from convertible instruments:

Investors and acquirers evaluate ownership exclusively on a fully diluted basis. Run every equity conversation — term sheet review, ESOP offer modelling, exit scenario analysis — on the fully diluted view.

A simple cap table structure

What most founders miss

The ESOP pool dilutes founders, not investors — when created pre-round. Investors typically require the ESOP pool to be "topped up" to a target size before the investment is counted (pre-money). The new shares come from the pre-money cap table, diluting existing founders. If a founder owns 60% pre-money and a new 10% ESOP pool is created pre-money, the founder's post-pool pre-investment ownership drops to ~54% before the investor's shares are counted. This is standard but non-obvious — model it before agreeing to the pool size.

Convertible instruments must be in the cap table even before conversion. Founders who have issued SAFEs or convertible notes and exclude them from the cap table are working with an incomplete picture. When those instruments convert at the next priced round, the surprise dilution can be significant. Track all unconverted instruments and model them at their cap or discount at all times.

The share register is the legal cap table. The company's share register, updated through RoC PAS-3 filings after every allotment, is the legally binding record of ownership. A discrepancy between the spreadsheet and the share register is a legal risk that surfaces in due diligence and can delay or derail a round. Keep both in sync after every allotment.

Waterfall modelling requires the cap table plus preference terms. The distribution of exit proceeds in an M&A depends on the cap table combined with the liquidation preference stack. A cap table without preference terms embedded is incomplete for exit modelling. Run the waterfall at a range of exit valuations — ₹50 crore, ₹100 crore, ₹500 crore — to understand founder economics across scenarios.

See also

• CCPS (Compulsorily Convertible Preference Shares) — each CCPS series appears in the cap table on a fully diluted as-converted basis
• ESOP — the full ESOP pool (granted and ungranted) is included in the fully diluted cap table
• Liquidation Preference — preference waterfall applied to cap table ownership determines founder proceeds in an exit
• Vesting Schedule — vested vs. unvested ESOP positions are tracked in the cap table and affect the exit waterfall
• RoC Annual Compliance — PAS-3 is filed for every share allotment; the share register must stay in sync with the cap table