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Cap Table Template

A Capitalization Table (Cap Table) is a spreadsheet or table that shows the equity ownership, investments, and dilution over time among a company's shareholders. It's crucial for managing equity ownership and understanding the impact of future funding rounds or exit scenarios.

Why a Cap Table Is Important:

  • Tracks equity ownership and value.
  • Helps in making informed financial decisions.
  • Essential for negotiations with investors and valuation.

When to Use a Cap Table:

  • Raising new funding rounds.
  • Issuing new shares or options.
  • Planning for mergers, acquisitions, or IPOs.

Key Components of a Cap Table:

  1. Shareholder Names:

    • List of all equity holders including founders, investors, and employees with options.
  2. Securities Owned:

    • Types of securities (e.g., common shares, preferred shares, options, warrants).
  3. Shares Owned:

    • Number of shares each entity owns.
  4. Percentage Ownership:

    • Ownership percentage of each shareholder.
  5. Valuation and Price Per Share:

    • Company valuation at different funding rounds and the price per share.
  6. Vesting Schedules:

    • Details on how employee stock options vest over time.
  7. Dilution:

    • Future dilution scenarios based on potential investment rounds.

Setting Up a Cap Table:

  • Start Simple: Begin with founding shareholders and add complexity over time.
  • Maintain Regular Updates: Adjust for new rounds, exits, or equity grants.
  • Use Software Tools: Consider using cap table management software for scalability and accuracy.
  • Consult Professionals: Engage legal and financial advisors for compliance and accuracy.

Tips for Managing a Cap Table:

  • Accuracy is Key: Ensure all transactions are recorded precisely.
  • Understand Dilution: Be aware of how future funding affects ownership.
  • Plan for the Future: Model out future financing rounds and exits.
  • Transparency with Shareholders: Keep shareholders informed about their equity status.

Outcome: A well-maintained Cap Table provides clear insight into the equity structure of a company, facilitating better strategic decisions, investor relations, and financial planning as the company grows and evolves.

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