A capitalization table, or cap table, is the company's ownership ledger: every shareholder, every option holder, and every instrument that will become shares, with the percentage each represents. It looks like a spreadsheet and it is, but reading it well tells you more about a company's future than most pitch decks.
The single most important distinction is between issued shares and fully diluted shares. Issued counts what exists today. Fully diluted counts everything that could become shares: the option pool, unexercised options, and every SAFE and note that will convert. Ownership percentages calculated on issued shares flatter everyone; the fully diluted view is the honest one, and it is the one investors use.
Two lines fool people. The option pool often sits on the cap table as a large unallocated block, which understates founders' real current ownership and overstates how much equity is left to hire with. And unconverted SAFEs may appear as a footnote rather than shares, hiding dilution that is already committed. A cap table that does not fully account for both is telling you a comforting story, not a true one.
Every financing, hire, and exit runs through the cap table, so a founder who cannot read their own is negotiating blind. Keep it current, model it on a fully diluted basis, and update it before every round, not after. This is general information, not legal or investment advice.
Read it fully diluted, or you are reading fiction.