A cap table is one of the first documents an investor asks for and one of the last a founder rebuilds. When the two versions don't match, deals slow down or die.
This guide covers the mistakes that appear most often in diligence, the commercial consequences of each, and a short health check you can run this week.
The mistakes investors see most
- Different spreadsheets showing different ownership positions
- Missing historical transactions (an early transfer, a repurchase, an option cancellation)
- Unrecorded share transfers between founders or early employees
- Incorrect fully diluted calculations that omit unissued option pool or SAFEs
- Options issued without complete board approval records
- Unclear vesting or exercise status for departed employees
- Former employees still appearing as active option holders
- Convertible instruments (SAFEs, notes) omitted from the fully diluted view
- Inconsistent share-class rights between the constitution and the register
- No clear record of dilution between rounds
Commercial consequences
- **Investor uncertainty.** If the cap table is wrong, what else is?
- **Legal reconstruction costs.** Both sides' lawyers, billed to the company
- **Delayed transactions.** Weeks, sometimes months
- **Shareholder disputes.** Especially with early employees and departed founders
- **Incorrect distributions.** At exit, the wrong people get paid the wrong amounts
- **Founder dilution surprises.** The cap table you close on isn't the one you thought you had
- **Reduced confidence in other company records.** Diligence expands into areas that were fine
The cap table is not a spreadsheet. It is the answer to the question 'who owns this company', and it must be defensible on any Tuesday, not just before a raise.
A short health check
- Does the cap table balance to 100 percent on both a basic and fully diluted basis?
- Is every issuance backed by a board or shareholder resolution?
- Are all option grants supported by signed agreements and current vesting schedules?
- Are SAFEs and notes modelled with realistic conversion assumptions?
- Do departed employees show correct exercised / lapsed / cancelled status?
- Does the share register match the cap table exactly?
- Does the constitution reflect the current share classes?
For a broader view of what investor diligence covers, see investor data room checklist. Employee equity errors — a common source of cap-table drift — are covered in employee equity schemes that work.
Common causes
The pattern behind most cap-table mistakes is the same. The primary record moved from a spreadsheet to a specialist tool without a proper reconciliation. Or grants were issued informally and documented later, with different details. Or a founder handled everything and left, taking the working knowledge with them.
This last one is a specific instance of founder dependency risk.
FAQ
How do I fix a cap table that has drifted?
Start with the share register (the legal record) and work backward through every transaction. A qualified corporate lawyer should validate the reconstruction before the next raise or transaction.
Do SAFEs need to be on the cap table?
Yes, on the fully diluted view. Model conversions under realistic assumptions and show what dilution looks like at various valuation caps.
What's the difference between basic and fully diluted?
Basic counts issued shares. Fully diluted counts issued shares plus every instrument that could become a share (options, warrants, notes, SAFEs, remaining option pool).
Where Equavion fits
Equavion connects the current ownership position with the transactions, approvals and documents supporting it — so the answer to 'who owns what' is always defensible.
Takeaways
- Cap table drift is the single most common cause of diligence delay
- The register is the legal record; the cap table must match it
- Fully diluted must include options, warrants, SAFEs and notes
- Fix drift before, not during, a raise
