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:
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Shareholder Names:
- List of all equity holders including founders, investors, and employees with options.
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Securities Owned:
- Types of securities (e.g., common shares, preferred shares, options, warrants).
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Shares Owned:
- Number of shares each entity owns.
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Percentage Ownership:
- Ownership percentage of each shareholder.
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Valuation and Price Per Share:
- Company valuation at different funding rounds and the price per share.
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Vesting Schedules:
- Details on how employee stock options vest over time.
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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.