What is included in a cap table?

Track your business data from anywhere. Understanding cap table components is crucial for all parties involved in a business. In matters such as fundraising, equity distribution, and corporate governance, it aids individuals in making prudent decisions.

Capitalization tables show the company’s ownership, worth, and dilution. They help prospects calculate their returns and help founders make stock distribution decisions.

Knowledge of cap tables helps strategic planning, including evaluating future investment rounds and employee stock options. It can be difficult to manage a cap table, but Eqvista’s cutting-edge cap table management software simplifies issuing, sharing, and managing all kinds of equity in a single place.

What does a cap Table consist of?

A cap table represents a startup’s ownership breakdown. It contains a complete database of all the shareholders and their respective ownership percentages. Making a table is as easy as using a spreadsheet tool like Excel or Google Sheets. It just has to cover all the information about your business in a well-organized manner.

However, nothing compares to a cap table platform’s precision and clarity. Utilizing cutting-edge technologies, Eqvista’s cap table safeguards all of your company’s data and information. Here is a cap table example from Eqvista that will help you understand what it looks like.

A well-structured cap table consists of the following components:

Shareholder names

Anyone or any organization that owns stock in a corporation is a shareholder. These shareholders can be the company’s founders, investors, staff members, and occasionally even clients or business associates who have received stock or shares. A cap table contains a comprehensive list of shareholders, including information on their shareholdings.

Types of Shares

A firm has different kinds of shares with certain advantages and rights:

• Common shares are a kind of ownership in a corporation and usually grant the holder the power to vote, which means they may have a say in how the company is run.
• On the other hand, Preferred shares often get better returns, closing rights, and exchange rights than common shares. You can find these rights spelled out in the company’s articles of formation or owners’ agreements.

They are crucial in determining how share values work in mergers or liquidations.

Option Pools

An option pool is a percentage of the business’s authorized shares set aside to award stock options to consultants, advisers, and employees. Stock options grant employees a right to acquire an agreed-upon volume of shares within a specified period at a preset cost (exercise price).

During fundraising rounds, option pools reward key participants and make sure their interests align with the company’s stakeholders. The option pool is usually a proportion of the company’s fully diluted shares outstanding and can be refreshed or expanded to accommodate new hiring or retention incentives.

SAFEs

The Simple Agreement for Future Equity (SAFE) is a financial arrangement that startups use to raise initial investment.

It is a more founder-friendly option than convertible notes when it comes to financial instruments. A SAFE, in its simplest form, is an agreement between a business and its investors.

The conversion price for the SAFE holders to shares is substantially lower than the market value of the instruments. The value cap or discount rate determines this conversion.

Convertible Notes

Issuing convertible notes allows investors to convert their debt into equity when certain events, such as a qualifying funding round, occur in the future.

The conversion mechanism and quantity of shares distributed to noteholders depend on the interest rate, maturity period, conversion discount, and value ceiling of convertible notes.

Company convertible notes are a flexible way to raise financing without an instant valuation, while investors can expect equity appreciation.

Warrants

A warrant is a type of financial instrument that enables the holder to buy a certain amount of a company’s shares for a set period and at a set price (the exercise price). Employers often grant warrants to raise money or as an incentive in employee, manager, or strategic partner pay deals. The terms that regulate the conditions of warrant exercise are the exercise price, expiration date, and vesting schedule.

Ownership Percentages

Each shareholder’s ownership percentage is the equity they possess in the firm. It is determined by the ratio of their shareholdings to the total number of shares outstanding. Ownership percentages determine voting rights, dividends, and firm control. Events like fundraising, stock option exercises, and convertible securities conversions may influence ownership percentages.

Tips for Choosing Right Cap Table Management Software

To ensure your business has the right cap table management software, there are a few things to remember while selecting. Let’s look at these aspects.

• Reputation – Cap table management software reputation represents platform dependability, trustworthiness, and track record. As a top provider of cap table management solutions, Eqvista’s cap table has become a trusted name for thousands of companies, investors, legal experts, and founders worldwide. User testimonials praise the platform’s simplicity, functionality, and customer service.
• Usability – You should aim to choose software with a simple data input procedure, a customizable dashboard, and an easy-to-navigate user interface. Eqvista’s cap table makes issuing, tracking stock transactions, and generating reports a breeze with its user-friendly platform and clear interface.
• Functionality – Cap table management software should track equity instruments, manage option pools, provide reports, and enable scenario modeling to meet your needs. With Eqvista, customers can handle equity transactions, issue and track stock options, generate personalized reports, and perform sophisticated cap table analyses—all in one place. In addition to all these features, Eqvista’s cap table supports multiple capital structures.
• Support – When utilizing the cap table management software, it’s important to have enough assistance to handle any queries or problems that may come up. Eqvista’s cap table offers email and live chat assistance for queries, technical concerns, and platform issues. Not only that, Eqvista provides extensive guides, tutorials, and other tools to aid with platform navigation and optimization.
• Price – Startups and early-stage enterprises with restricted funds prioritize cost-effectiveness when choosing cap table management software. Regardless of your business’s size or stage of development, Eqvista’s cap table has a price plan that will meet your demands. There are no hidden costs, so consumers can select a plan that fits their budget and meets their objectives.

Try Eqvista’s Cap Table for Free!

Taking care of a cap table can be hard and stressful, but Eqvista simplifies it. Eqvista’s cap table management software has several useful features that may help new and existing companies. You can conduct valuations and produce share certificates, board resolutions, IRS filings, and stock compensation reporting using Eqvista.

Using Eqvista’s intuitive UI, you can quickly and easily create and manage your cap table. Plus, we update our system with all the newest securities legislation changes. Maximize efficiency in managing your cap table and stay relevant with real-time updates! Contact us now to begin.