A cap table is a spreadsheet or table that provides a detailed overview of the ownership structure of a company. It includes information about the company’s shares, who owns them, and the different types of securities like common stock, preferred stock, warrants, and options.
What’s a pre-money cap table?
A pre-money cap table details the company’s ownership structure before any new investments or financing rounds. It represents a snapshot of the ownership just before new capital is injected into the company.
What is a post-money cap table?
A post-money cap table, on the other hand, details the ownership structure of the company after a financing event, such as an investment round. It shows how the ownership has been diluted or restructured as a result of the new capital.
Why is a cap table important?
A cap table is essential for understanding the ownership structure of the company and the relative rights of different shareholders. It is used by investors, founders, employees, and others to understand their ownership stake, voting rights, and potential financial return. It’s a critical tool for decision-making in financial and strategic planning.
How do I make a cap table?
Creating a cap table involves listing all the owners of the company, including shareholders, option holders, and warrant holders, along with the number and types of shares they own. It often starts as a spreadsheet, including calculations to understand how different financing scenarios would affect ownership.
What Details Should a Cap Table Include?
A cap table should include details like the names of shareholders, number of shares owned, type of securities (common/preferred stock, options, etc.), price per share, total value, ownership percentage, and any specific terms or conditions related to those securities.
Cap table example:
Shareholder | Shares | Type | Ownership % ------------------|---------|----------------|------------- Founder A | 500,000 | Common Stock | 50% Founder B | 400,000 | Common Stock | 40% Investor X | 100,000 | Preferred Stock| 10% ------------------|---------|----------------|------------- Total | 1,000,000| | 100%
What Information Does the Cap Table Keep Track of?
A cap table tracks information related to the ownership structure of the company, including: – The names of all shareholders. – The type and number of shares owned by each party. – Ownership percentage. – The rights, preferences, and restrictions associated with different types of shares. – Changes in ownership over time through various rounds of financing or other events.
In summary, a cap table is an essential tool that provides a detailed view of the ownership structure of a company, and it plays a crucial role in strategic planning, decision-making, and negotiations with potential investors. It evolves over time as the company grows, raises more capital, or undergoes other significant changes.