Employee equity for startups: options, vesting, and cap tables
How stock options, vesting, and option pools appear on your cap table—and how to manage them without expensive software.
Stock options and vesting show up on your cap table as soon as you start hiring. Here is a practical overview of what to track and why it matters in diligence.
Employee equity often means ISOs, NSOs, restricted stock, or RSUs. Tax and plan design depend on your jurisdiction and counsel—your cap table should reflect the economic facts either way.
Track the option pool, each grant (holder, quantity, strike, vesting schedule), exercises, cancellations, and repurchases. Investors use this in diligence; mistakes slow deals.
Vesting unlocks ownership over time. A common pattern is four years with a one-year cliff. Separate vested and unvested balances so fully diluted ownership is clear.
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