How to Set Up Your Cap Table as a First-Time Founder

If you just incorporated your startup, congratulations. Now you need a cap table. This guide walks you through exactly what that means and how to set it up correctly.

What Is a Cap Table?

A capitalization table (cap table) is a spreadsheet or tool that tracks who owns what in your company. It lists every shareholder, how many shares they hold, and what percentage of the company they own.

You need a cap table for:

• Knowing how much of your company you're giving away in each round
• Issuing equity to employees, advisors, and investors
• Modeling fundraising scenarios before committing
• Tax filings and legal compliance
• Due diligence when raising a round

Step 1: Choose Your Share Structure

Most Delaware C-Corps authorize 10,000,000 shares of Common Stock at incorporation. This is the standard. Don't overthink the number — it's arbitrary and can be changed later.

Why 10 million? It makes the math easy. If you have 2 co-founders splitting 50/50, each gets 5,000,000 shares. The per-share price starts very low ($0.0001 par value), which is important for 83(b) elections.

Step 2: Allocate Founder Shares

This is the most important decision you'll make early on. There's no perfect formula, but consider:

• Equal split (50/50 or 33/33/33) — Simple, works when founders contribute equally
• Unequal split — When one founder has more experience, capital, or IP contribution
• Vesting — Always add 4-year vesting with a 1-year cliff, even for founders. This protects everyone if someone leaves early.

Pro tip: If you're a solo founder, you own 100% but should still set up a proper cap table. Investors will ask for it.

Step 3: Set Up an Option Pool

Before your first hire, create an employee stock option pool (ESOP). A typical pre-seed option pool is 10-15% of authorized shares.

This pool is reserved for future employees, advisors, and contractors. You don't need to issue all the shares immediately — the pool just needs to be authorized.

Why do this early? When you raise your first round, investors will expect an option pool to already exist. If it doesn't, they'll insist you create one from the pre-money valuation (the "option pool shuffle"), which dilutes you more.

Step 4: Track Your SAFEs and Convertible Notes

If you've raised money via SAFEs (Simple Agreements for Future Equity) or convertible notes, these need to be tracked on your cap table even though they haven't converted to shares yet.

Key details to track per SAFE:

• Investment amount
• Valuation cap
• Discount rate
• Pre-money vs. post-money
• MFN clause (if applicable)

These instruments convert to shares when you do a priced round. A good cap table tool will model the conversion automatically so you can see the dilution before it happens.

Step 5: Keep It Updated

Your cap table is a living document. Update it when:

• You issue new shares or options
• An employee exercises their options
• A SAFE converts in a new round
• Someone leaves and shares are cancelled/returned
• You do a new fundraising round

Common Mistakes

• Not using vesting for founders — If a co-founder leaves after 3 months with 50% of the company, you have a serious problem
• Not tracking SAFEs — They're not on the cap table until conversion, but you need to model the dilution
• Using a spreadsheet instead of a tool — Spreadsheets break when things get complex. One formula error and your cap table is wrong.
• Waiting until you raise to set this up — Investors will ask for your cap table. Having it ready signals you're organized.

Get Started in 30 Seconds

With Slyced, you can set up your cap table in under a minute. Our onboarding wizard walks you through company setup, founder allocation, and share classes. Import from Carta if you have an existing cap table, or start fresh.

Free for up to 25 stakeholders. No credit card required.