What is a Cap Table?
The capitalization table also called a “cap table,” details a company’s ownership structure. It is a spreadsheet that lists the company’s securities, including common stock, preferred stock, options, warrants, and convertible debt, who owns these securities, and how much is paid for these securities.
In addition, the table includes
- The names and the number of the shareholders
- The amount of money each shareholder has invested
- The ownership percentage each shareholder has
- The shareholders voting rights.
- Total number of outstanding shares
Understanding Cap Table
A cap table is an essential tool for startups and early-stage companies. It provides a clear overview of who owns what in the company and can be used to help make important decisions about equity dilution, fundraising, and other financial matters.
A cap table structure not only shows who owns how much of the company but also requires a rigorous process of updating, monitoring, and regular communications with all stakeholders.
Investors wishing to invest in the startup company are very interested in this table, as it shows a list of their future partners, the history of the company’s financing, and those who have claims on the company – if any. It also shows the size of the founders’ ownership and whether the employees have any shares.
The cap table can give a quick overview of the company’s capital structure. It can be used to raise funds from investors, sell the company, or help the founders keep track of their equity. It can be a helpful tool for Founders and investors alike. For example, founders can use it to keep track of their equity, and investors can use it to see how their investment is structured.