Understanding Startup Cap Tables: What Every Founder Needs to Know
Cap tables (capitalization tables) might sound like dry accounting tools,
but they’re the DNA of your startup’s ownership.
Get them wrong, and you can derail fundraising, lose control, or even destroy your company.
Let’s break it down — founder to founder.
1️⃣ What Is a Cap Table?
A cap table is a detailed record of:
✅ Who owns what percentage of the company
✅ How many shares are issued and to whom
✅ How ownership changes after each funding round
Example: Imagine your company as a pizza.
The cap table tells you who owns each slice today — and who will own what after you invite new investors to the table.
2️⃣ Why Founders Must Care (Even Before Investors Come In)
You might think cap tables only matter when you raise money.
Not true.
✅ Early mistakes (like splitting everything 50/50 without vesting) can haunt you later
✅ Clear, well-managed cap tables make you more attractive to investors
Example: A Singaporean edtech startup struggled during Series A
because they couldn’t cleanly show ownership — forcing expensive legal cleanups.
3️⃣ How Dilution Works
Every time you raise money,
you issue new shares — which dilutes existing ownership.
✅ Dilution isn’t necessarily bad (it’s how you grow), but it needs to be managed
✅ Founders should model dilution across multiple rounds
Example: A SaaS founder was shocked to find himself owning just 15% post-Series B —
because he never tracked dilution across fundraising stages.
4️⃣ Stock Options and ESOPs
Your employees want skin in the game.
Enter the Employee Stock Ownership Plan (ESOP).
✅ Set aside a % pool of shares for current and future team members
✅ Factor this into your cap table early — or risk painful reshuffling later
Example: A fintech startup nearly lost a star hire because they hadn’t properly reserved ESOP shares — signaling poor planning.
5️⃣ Why Work With Paperwork.sg?
We:
✅ Help founders model cap tables pre- and post-fundraising
✅ Advise on dilution scenarios and ESOP allocations
✅ Ensure your corporate paperwork matches investor expectations