Cap table 2026: mastering your capitalisation table

Quick answer. The cap table, or capitalisation table, records the breakdown of a company's capital: who holds how many shares, plus all the instruments giving access to capital (employee warrants, investor warrants, SAFE-style warrants, convertible bonds). Before a series A, the investor demands a fully diluted cap table reconciled with the share register: understanding what it contains and knowing how to read it then becomes decisive. It is the reference tool to anticipate dilution before a raise or a sale.

The cap table is the most strategic governance document of a start-up, and one of the most often neglected early on. As long as capital comes down to two or three founders, a spreadsheet is enough. The problem surfaces later: at the first round, the investor demands an exact snapshot of capital, fully diluted, consistent with the articles and the share register. A table kept in a hurry then reveals gaps, forgotten instruments, roundings that do not add up. The very ability to issue the securities that populate a cap table (investor warrants, convertible bonds, instruments giving access to capital) rests on article L228-91 of the French Commercial Code, reserved for joint-stock companies. Understanding what the table contains and how to read it is therefore essential for any founder. Here is the gist, and the pitfalls we see most often.

The cap table goes well beyond the mere list of shareholders. It records the shares held by each party, founders and investors, but also all the instruments that may one day become shares.

Each family of instruments represents potential dilution, that is, shares that do not yet exist but will appear on conversion or exercise. Ignoring them gives a distorted view of the real breakdown of capital, a subject directly linked to the seed instruments we compare between SAFE-style warrants and convertible bonds.

The last line, the option pool reserved but not yet allocated, is the one founders forget most. Investors, by contrast, systematically factor it back into dilution. A 10% pool reserve already dilutes the founders, even if no warrant has yet been distributed.

The relevant reading of a cap table is done fully diluted.

Fully diluted capital includes, beyond existing shares, every security likely to be converted into shares: employee warrants, investor warrants, SAFE-style warrants, convertible bonds, and the option pool. It is this view that gives the real breakdown of power and value, once all instruments are exercised. A founder reasoning on existing shares alone overestimates their stake: on conversion of the outstanding instruments, their holding mechanically dilutes.

This is why any raise negotiation is conducted fully diluted, to measure the founders' real dilution at the round considered, as we detail in our analysis of the seed to series A raise. One technical point deserves attention: the option pool is almost always created or enlarged before the investor comes in, so it is borne by the founders alone. It is a negotiation term in its own right, often underestimated when structuring the first round.

The theory of dilution is best understood on a concrete case. Take a two-founder company, with an option pool already reserved, that welcomes a series A investor.

Situation before the round. Each founder holds 500,000 shares, so 1,000,000 issued shares in total. An option pool of 100,000 warrants has been reserved for future hires, but no warrant is yet allocated. Operation. The investor subscribes 200,000 new shares at series A. Fully diluted capital thus moves from 1,100,000 to 1,300,000 securities.

The reading is telling. On issued shares alone, the founders see 100%. Fully diluted, before the raise even happens, the pool of 100,000 warrants already brings them to 90.9%. After the investor comes in, their combined stake falls to 76.9%. If the investor also demands an enlargement of the pool before entry, borne by the founders alone, dilution deepens further. A founder reasoning on "60% kept" must therefore check on which basis: issued shares or fully diluted, before or after pool top-up. The figures above are a simplified illustration, excluding preference shares and the discount on seed instruments: your real case is modelled on your own data.

In the start-up cap tables we follow, employee warrants (BSPCE) are the dominant incentive instrument. They let founders associate staff and directors with value creation without an immediate cash outflow. But their issue is subject to strict conditions, and a clean cap table means checking those conditions are met at the date of grant.

Three conditions structure eligibility. The company must have been registered in the trade and companies register for less than fifteen years at the grant date, counted day for day. It must be an unlisted joint-stock company (or a market capitalisation below 150 million euros) and subject to corporate income tax in France. Finally, its capital must be held, directly and continuously, at least 15% by natural persons, this threshold having been lowered from 25% to 15% by the Finance Act for 2026 (law no. 2026-103 of 19 February 2026, article 25), for warrants granted from 1 January 2026.

This change broadens access to employee warrants for companies already well opened to investment-fund capital. On the beneficiary's tax side, the gain made on the sale of shares from employee warrants is taxed under a specific regime: by default it falls under the single flat-rate levy, that is, 30% in total (12.8% income tax and 17.2% social levies), raised to 31.4% after the CSG increase applicable in 2026. When the beneficiary has carried out their activity in the company for less than three years at the time of sale, the gain bears a higher income-tax rate. The seniority condition therefore drives the applicable rate: it is a parameter to anticipate, not to discover at the time of sale. These rates are indicative and this article remains for information (see the disclaimer at the end of the page): the beneficiary's taxation is checked against their own situation. When founders hold their securities through a holding company, the interplay between the cap table and holding company taxation is worth framing from the seed stage.

A cap table only has value if it is rigorously kept over time, and above all consistent with the legal documents that prevail.

The cap table is not, in itself, a legal register: it is a steering tool. The enforceable documents are the articles, the share transfer register and the individual shareholder accounts, together with the shareholders' agreement. Every capital operation (increase, employee warrant grant, investor warrant issue, instrument conversion, share transfer) must be recorded in those documents, then reported immediately into the cap table. A divergence between the table and the register spotted by the investor weakens the whole operation, because it suggests the company does not control its own capital.

Our view: the cap table is a steering instrument, not an administrative table#

In the financing engagements we support, the quality of the cap table is a sign of seriousness that shows immediately. A clear, up-to-date table, reconciled with the share register and the agreement, speeds up due diligence and strengthens the founders' negotiating position. Conversely, a table rebuilt in a rush consumes advisory time, delays the closing and feeds distrust.

Our conviction is simple: the cap table is kept from creation, reasoned systematically fully diluted, and simulated before every operation. Before issuing employee warrants or welcoming an investor, model the effect of the operation on each holder's stake, as in the worked example above. Anticipating dilution allows negotiation in full knowledge and preserves the motivation of the founding team, two stakes founders often underestimate in favour of the headline valuation alone.

The underestimated risk: confusing headline percentage with real power#

Holding 60% of capital does not mean holding 60% of power. Preference shares, agreement clauses (veto rights, qualified majorities, liquidation preference clauses) and warrant promises can disconnect the economic breakdown from the political one. A cap table read alone, without the agreement, gives false security. This is why reading the table and reading the shareholders' agreement are inseparable, and why a future sale can hold surprises if the liquidation preference absorbs part of the price ahead of the founders.

Founders consult us on the occasion of a series A round. On paper, they thought they kept roughly 70% of capital between them. Rebuilding the cap table fully diluted changes the picture.

They had granted employee warrants to three key staff, reserved a 10% option pool for future hires, and issued SAFE-style warrants on a first business-angel contribution, with a conversion discount. Once these instruments were integrated, and given the new round's dilution and the pool top-up demanded by the investor (borne by the founders alone before its entry), their combined stake fell appreciably below the level they imagined, on a logic close to our worked example. The reconstruction delayed the operation by several weeks and weakened their negotiating position, for want of having simulated the sequence upstream. Once the table was made reliable, each operation was simulated before signing and consistency with the share register checked at every movement: at the following round, capital due diligence was wrapped up in a few days rather than a few weeks, and the founders entered the negotiation with a clear view of their dilution. The lesson is constant: what costs dearly is not the dilution itself, it is discovering it too late.

In practice: keeping and securing your cap table#

• Keep the cap table from creation, and reconcile it after each operation with the share transfer register, the articles and the agreement.
• Always reason fully diluted: include employee warrants, investor warrants, SAFE-style warrants, convertible bonds and the unallocated option pool.
• Before any employee warrant issue, check the eligibility conditions (less than fifteen years old, joint-stock company subject to corporate tax, threshold of holding by natural persons).
• Simulate the effect of each future operation (raise, grant, conversion) on each holder's stake, before signing.
• Identify who bears the option pool top-up: it is almost always the founders, before the investor comes in.
• Keep the history of issue prices and discounts: they serve to calculate conversions and the beneficiaries' taxation.

• The unallocated option pool already dilutes the founders: do not treat it as a neutral reserve.
• A cap table disconnected from the share transfer register is not enforceable: only the legal documents prevail.
• SAFE-style warrants and convertible bonds reveal their real dilution only at conversion, depending on the valuation and the discount: model several scenarios.
• The liquidation preference attached to preference shares can absorb part of the sale price ahead of the founders: the percentage of capital does not tell the split of proceeds.
• The eligibility conditions for employee warrants must be met at the grant date and checked over time: passing the fifteen-year mark closes the instrument for the future.
• A poorly documented employee warrant grant (exercise price, value used) weakens both the cap table and the beneficiary's taxation.