The capitalization table, also known as the cap table, is a table or spreadsheet for early stage ventures or startup to keep records of all ownership stakes or capitalization.
The capitalization table, also known as the cap table, is a table or spreadsheet for early stage ventures or startup to keep records of all ownership stakes or capitalization. The data in the cap table includes common shares, preferred shares, options, warrants, and any price that has been paid by the shareholders for their securities.
With the help of the table, you would be able to track all the ownership stakes on a fully diluted basis. In short, this enables the overall capital structure of the company to be ascertained at a quick glance. In the beginning, the founders are the ones that are normally listed followed by the executives and then the main employees that have been granted equity stakes. After that comes the investors, which includes the venture capital firms and angel investors or any others who added into the company for making the business plan better.
In short, a simple capitalization table has the following things listed in it:
- Common shares;
- Preference shares;
- Convertible notes;
- Any other investment made in the company.
In a complex cap table, there are added lists that include:
- Public offering;
- Mergers and acquisitions;
- New funding sources; and
- Any other hypothetical transactions.
Each line of the cap table has to add some value to the business to make it more attractive to the partners, investors, and employees. In short, having an attractive cap table means that your company has grown to be highly valued in the business world.
If you are still not sure what the cap table is about and want to know more, Eqvista can help you understand it better. And if you need a cap table application that would be easy to manage, then check out the Eqvista application. Find out more about it here!