Capitalization Table (Cap Table)
A cap table is a table that shows the breakdown of a company's shareholders' equity.
What is a cap table and why is it important?
A capitalization table, also known as a "cap table," is a document that shows the ownership structure of a company. It lists all of the company's shareholders, the number of shares they own, and their percentage of ownership. The cap table is important because it shows who owns what percentage of the company, which is important information for fundraising and valuation.
How is a cap table used in fundraising and valuation?
A cap table is used in fundraising by showing potential investors the current ownership structure of the company. It is also used to calculate the company's valuation by determining the percentage of ownership of each shareholder.
How do you handle options, warrants and convertible securities in a cap table?
Options, warrants, and convertible securities are typically included in a cap table as separate line items, along with the number of shares and the percentage of ownership they represent. These securities can have a significant impact on a company's ownership structure and should be carefully tracked in the cap table.
How do you handle the different classes of shares in a cap table?
Different classes of shares, such as common shares and preferred shares, should be tracked separately in a cap table. Each class of shares may have different voting rights and privileges, and the percentage of ownership of each class should be clearly indicated in the cap table. It's important to track the different classes of shares separately because the different classes may be treated differently in certain situations, such as a merger or acquisition.
