Who Owns What
A cap table (capitalization table) tracks ownership stakes in a company — founders, investors, employees with stock options — showing exactly who owns what percentage and how dilution occurs with each funding round.
Structure
Typical early-stage cap table:
- Founders: 60-80% equity split among co-founders
- Seed investors: 10-20% equity
- Employee option pool: 10-15% reserved for hiring
- Advisors: 0.5-1% total
With each funding round, everyone gets diluted proportionally.
The Dilution Math
Example:
- Seed round: Founders own 70%, investors 20%, option pool 10%
- Series A: Company raises $10M at $40M pre-money ($50M post-money)
- Investors get 20% ($10M / $50M)
- Everyone else diluted: Founders now 56% (70% × 80%), seed investors 16%, etc.
Horror Stories
- Eduardo Saverin vs Facebook (2005): Zuckerberg diluted Saverin from 34% to 0.03% via new stock issuance, triggering lawsuit (settled)
- Snapchat early employee (2013): Reggie Brown claims he was co-founder, got diluted out, sued for $157.5M (won)
- Uber early engineers: Stock options had liquidation preferences favoring late investors, crushing value
Tools
Carta (launched 2012) became the standard cap table management platform, eventually valued at $7.4B. Alternatives: Pulley, AngelList, Captable.io.
Founder Lessons
- Protect founder equity: Don’t give away >25% in seed rounds
- Understand liquidation preferences (investors get paid first)
- Option pool comes from founder equity, not investor equity
- Refresh option pool before raising to avoid extra dilution
Sources: Carta Cap Table Guide, Cooley GO