A cap table, or capitalization table, is a document that shows the equity ownership structure of a company. It is an essential tool for startups and early-stage businesses, but all types of companies may use it as well. A comprehensive cap table should include the following information:
Shareholder Information: The cap table should list the names of all shareholders, including founders, investors, and employees who have been granted equity ownership. It should also include the number of shares or securities owned by each shareholder.
Type of Securities: The cap table should specify the type of securities held by each shareholder, such as common equity shares, preferred equity shares, stock options, warrants, or convertible notes.
Percentage of Ownership: The cap table should calculate the percentage of ownership for each shareholder based on the number of shares or securities they hold relative to the total number of outstanding shares or securities.
Vesting Schedule: If the company has issued stock options or other equity compensation grants with a vesting period, the cap table should include a vesting schedule to track when more shares will be issued to shareholders.
Date of Issuance: The cap table should record the date on which each share or security was issued to a shareholder.
Purchase Price or Grant Value: For investors or employees who have purchased or been granted shares or securities, the cap table should include the purchase price or grant value.
Option Exercise Price: If the company has issued stock options, the cap table should include the exercise price at which the option can be converted into a share of stock.
Fully-Diluted Ownership: The cap table should provide a fully-diluted picture of equity ownership, taking into account all outstanding shares, securities, warrants, and options.
Dilution Calculations: As the company issues new shares or securities, the cap table should automatically update to reflect the impact on existing shareholders' ownership percentages.
Historical Transactions: The cap table should maintain a record of all past transactions, such as share issuances, option grants, and stock repurchases, to provide a complete and accurate ownership history.
Future Planning: The cap table can be used for strategic planning, such as assessing the effect of future funding rounds or employee stock options on the company's ownership structure and value.