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How to Read a Cap Table: Who Really Owns a Startup

Beginner Investing • 6 min

An early Amazon employee in the 1990s was given stock options worth what looked like nothing when the stock crashed 80% during the dot-com bust. The ones who held on became millionaires. A capitalization table (cap table) is simply a spreadsheet listing every owner of a company's equity — founders, employees with stock options, and every investor from seed through Series C and beyond — and exactly what percentage each one owns.

Founders usually don't own the percentage they started with by the time a company is successful — every new funding round issues new shares to new investors, and everyone else's percentage shrinks. This is dilution, and it's normal.

Insider Angle: venture investors almost always negotiate a "liquidation preference" — the right to get their money back first, before common shareholders (including most employees), if the company is sold. A startup can sell for what sounds like a huge number in headlines, while employees holding common stock walk away with far less than their "percentage ownership" would suggest.
Try This: If a startup raised $50M across three rounds each with a standard 1x liquidation preference, and then sold for $80M, work out roughly how much goes to preferred investors first before any common/employee shares get paid — the gap between headline valuation and what employees actually receive.
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