Cap Table Management for Indian Startups: Setup, Tools, Best Practices

What is a Cap Table?

A Capitalization Table (Cap Table) is the master record of all securities issued by the company — equity shares, preference shares, convertible instruments, warrants, ESOPs. It shows:

• Each shareholder's stake (by name)
• Number of shares and class
• Percentage ownership (fully diluted)
• Cost basis and rights
• Vesting schedules (for ESOPs)

It's the single most important document for fundraising, M&A, ESOP issuance, and exit planning. A messy cap table can sink deals.

Components of a cap table

1. Founders — Common equity, often with vesting schedules

2. Employees (ESOPs) — Stock options at various vesting stages (granted, vested, exercised)

3. Investors — Preference shares (CCPS), convertible notes (CN), pure equity

4. Advisors/Consultants — Equity for services (sweat equity)

5. Convertible instruments — CCPS, CCD, CN with conversion details

6. ESOP pool — Reserved for future grants (typically 10-15% of fully diluted)

Fully diluted basis — Why it matters

Cap tables are computed on FULLY DILUTED basis — assuming all convertible instruments convert and all options are exercised. This gives the 'worst case' dilution view.

Example: Company has:

• 100,000 equity shares outstanding
• 20,000 ESOP options (vested + unvested)
• 10,000 shares from convertible notes at next round

Fully diluted = 100,000 + 20,000 + 10,000 = 130,000 shares

A founder with 50,000 shares = 50,000/130,000 = 38.5% on fully diluted (vs 50% on outstanding only)

Common cap table errors

1. Wrong number of shares — Doesn't match SH-7 / PAS-3 filings or share register
2. Forgetting ESOP vesting — Showing 100% vested when only 25% vested
3. Missing convertibles — CNs and CCPS not reflected on fully diluted view
4. Stale data — Not updated after recent transactions
5. Wrong percentage — Calculated on outstanding instead of fully diluted
6. Multiple versions floating — Different versions with founders, investors, employees

Tools and best practices

Recommended tools:

• Carta — Global leader, comprehensive features (~$1,200+/year)
• Hissa — Indian, startup-focused (₹50,000-2 lakh/year)
• Trica — Indian, integrated with HRMS
• Spreadsheet templates — For very early stage; transition to tools at seed/Series A

Best practices:

1. Maintain SINGLE source of truth — All other versions are copies
2. Update IMMEDIATELY after every transaction (allotment, transfer, ESOP grant)
3. Document every change with linked board resolution and filings
4. Reconcile quarterly with MCA records and statutory registers
5. Provide controlled access — Founders, CFO, CS, Board; not everyone
6. Run scenarios for upcoming rounds (anti-dilution, ESOP top-ups)