A Cap Table (Capitalization Table) is a detailed breakdown of a startup’s ownership structure, showing who owns shares, how much they own, and the impact of dilution over time. It typically includes founders, investors, employees with stock options, and other stakeholders. A cap table is essential for managing fundraising, equity distribution, and exit planning.
Why is a cap table important for startups?
A cap table helps startups track ownership, manage fundraising rounds, and calculate dilution when issuing new shares. Investors also review it to assess equity distribution and potential returns.
What information is included in a cap table?
A cap table typically lists: -Equity holders (founders, investors, employees, advisors, etc.) -Types of shares (common stock, preferred stock, convertible notes, options, SAFEs) -Percentage ownership -Valuation and funding rounds -Dilution effects after new investments
How does a cap table change over time?
As a startup raises funding, issues stock options, or exits, the cap table updates to reflect new equity distributions and changes in ownership percentages.
What happens if a cap table is mismanaged?
Poor cap table management can lead to legal disputes, investor conflicts, over-dilution of founders, or difficulties securing future funding.
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