Concepts and worked examples
Cap table concepts and examples.
Learn cap table management, ownership, dilution, vesting, SAFEs, and financing terms through clear explanations and worked examples.
Start with the basics.
Follow the worked examples.
35 articles in this section
Ownership basics
What is a cap table?
Read a capitalization table and understand the ownership denominator.
Authorized, outstanding, and fully diluted shares
Understand which share counts belong in each ownership calculation.
Understand stock splits and ownership percentages
Distinguish a change in share units from a new investment.
Compare transfers, repurchases, and new issuances
Separate three transactions that can produce different ownership results.
Cap table glossary
Find concise definitions and links to the relevant workflows.
Common stock and preferred stock compared
See which rights sit on a share class, and which do not.
Employee equity
Vesting and option pools explained
Separate the grant, the vesting schedule, and the available reserve.
Stock options, RSUs, and restricted stock
Understand what each award represents and how it becomes a holding.
ISO and NSO stock options explained
Separate a recorded option classification from a tax determination.
Early exercise, reverse vesting, and 83(b)
Keep exercise, vesting, and election records distinct.
Single-trigger and double-trigger vesting acceleration
Understand which conditions change the unvested balance.
Build an option-pool hiring forecast
Calculate a pool need from planned hires rather than a headline percentage.
Follow an option grant from issuance to cancellation
Connect one grant’s lifecycle to ownership and plan balances.
The ISO $100,000 limit, with a worked grant
Test one grant against the annual ISO limit, year by year.
Post-termination exercise windows
See which clock closes a departing holder’s options first.
Fundraising
Understand equity dilution
Work through a funding round and see why percentages change.
Pre-money and post-money valuation explained
Connect a financing’s headline valuation to its share price.
SAFEs and convertible notes on a cap table
Track convertible instruments without treating them as issued shares.
Anti-dilution protection in a down round
Understand how a lower-priced financing changes preferred conversion terms.
Calculate note interest and conversion shares
Reconcile a note’s principal, interest, conversion price, and shares.
Calculate dilution from a pre-money pool increase
See how pool timing changes the price and existing holders’ ownership.
Pro rata rights explained
See what a pro rata right entitles an investor to buy.
Most-favored-nation clauses in SAFEs and notes
See how an MFN election changes a convertible’s terms.
Preferred dividends: cumulative, compound, and paid
Work out what a preferred dividend actually adds to a claim.
Exit planning
Liquidation preferences and exit proceeds
Compare ownership with what a holder receives in a sale.
Distinguish exit proceeds from share value and exercise cost
Understand what a modeled payout includes before treating it as cash received.
Participating preferred and participation caps
Work out what participation and a cap pay at each sale value.
How an exit waterfall is calculated
Follow the money through an exit in payment order.
Read the breakeven points in an exit model
Find the sale values where the answer changes.
Reporting concepts
Stock compensation expense and valuation assumptions
Understand the different values in an equity compensation report.
409A valuations and option strike prices
Keep option strikes tied to a supportable share value.
Straight-line and graded expense attribution
See how attribution changes the timing, not the total.
Cap table management
A practical cap table maintenance checklist
Build a repeatable review process for reliable equity records.
Prepare your cap table for financing diligence
Build a traceable review package from equity records and source documents.
Reconcile a cap table with its source records
Explain differences by date, denominator, instrument, and transaction.
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