What is a Cap Table?

The term ‘cap table’ refers to the capitalization table, which is a table listing all the details about your company’s equity ownership. It lists every individual who is a shareholder, how many shares they have, what type of equity they hold, and any convertible securities like SAFEs or convertible notes that might become equity in the future. The cap table is the only record that your startup will have regarding your ownership.

The cap table can have different components, including common stock, preferred stock, stock options, restricted shares, SAFEs, and warrants, which makes it extremely valuable to startup companies and other businesses that are raising money or issuing shares. The cap table allows the founders and the investors to understand the structure of the ownership and estimate the impact of investments on the ownership.

What a Cap Table Usually Indicates?

• Ownership percentage: The precise proportion of the firm’s equity owned by each of its founders, employees, and investors.
• Types of securities: The types of securities (common stocks, preferred stocks, options, SAFEs, and warrants) possessed by each stakeholder.
• Past investment activities: Prior investment rounds, the entities that took part in them, and the price they paid.
• Pool of employee stock options: The number of shares reserved for attracting new employees.
• Percentage dilution: Changes in ownership percentage due to issuance of new shares in subsequent funding rounds.

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