{"id":28738,"date":"2022-12-28T12:56:32","date_gmt":"2022-12-28T12:56:32","guid":{"rendered":"https:\/\/www.growthmentor.com\/location\/athens\/cap-table-copy\/"},"modified":"2023-01-17T10:04:35","modified_gmt":"2023-01-17T10:04:35","slug":"cap-table","status":"publish","type":"glossary","link":"https:\/\/www.growthmentor.com\/glossary\/cap-table\/","title":{"rendered":"Cap Table"},"content":{"rendered":"\n

What is a Cap Table?<\/strong><\/h3>\n\n\n\n

Definition of a Cap Table<\/strong><\/h4>\n\n\n\n

Also known as a capitalisation table, a cap table is a spreadsheet that a company uses to list all of the securities that the company owns. This includes assets like common and preferred shares, along with who owns them and how much they paid for them. <\/p>\n\n\n\n

A cap table will also outline the percentage that every investor owns in the company, as well as how much those investments are worth and how they\u2019ve been diluted over time<\/a>. <\/p>\n\n\n\n

Cap tables are generally amongst the first documents that a company creates, in part because they get more and more complicated as time goes on due to additional funding rounds, IPOs, mergers, acquisitions and other major transactions that can affect a company\u2019s capitalisation.<\/p>\n\n\n\n

Cap tables will also typically include legal documentation and they\u2019re often required by venture capitalists and other investors. Entrepreneurs also use them to make sure that they understand their business and how its finances work. <\/p>\n\n\n\n

Most companies use spreadsheet software to create cap tables, although there are also specialist software applications that are designed to help people to create them. They\u2019re normally set up so that investors are listed on one axis while the securities they own is on another. <\/p>\n\n\n\n

Specialist cap table software<\/a> is often the best choice because it can typically bring in data from external finance software and update itself with no input needed from you. Better still, it will stop you from ending up with dozens of different files with different dates on them and causing a version control nightmare if multiple different people are accessing and editing them. Best of all, you can often store your cap table in the cloud so that you can access it from any device and not have to worry about what will happen if your computer dies.<\/p>\n\n\n\n

It\u2019s important to note that as the whole purpose of cap tables is to make information more accessible, companies should go out of their way to keep them as simple as possible. Any unnecessary information should be purged from the cap table so that it\u2019s as functional as possible. <\/p>\n\n\n\n

Cap tables are used by companies for a variety of different purposes which include: <\/p>\n\n\n\n

Fundraising: <\/strong>To show to investors during negotiation so that they can see how the company is structured and the current state of its finances. It also shows them which other investors are already on board. <\/p>\n\n\n\n

Hiring: <\/strong>Cap tables can be useful during recruitment because it helps companies to be more transparent. It\u2019s particularly useful for executives because they can get a better idea of how much they\u2019re likely to receive from their stock options if the company is sold or goes public. <\/p>\n\n\n\n

Compliance: <\/strong>Cap tables can be useful for companies to legally track who owns equity and to use for taxation and legal compliance. <\/p>\n\n\n\n

Selling and liquidation:<\/strong> As you\u2019ve probably noticed, cap tables are useful if the company sells up or goes into liquidation because they\u2019ll show how much shareholders can expect from the proceeds.<\/p>\n\n\n\n

What fields are included in a cap table?<\/strong><\/h4>\n\n\n\n

Cap tables vary from company to company and so no two of them look the same. However, commonly used fields include:<\/p>\n\n\n\n

    \n
  • Authorized shares<\/li>\n\n\n\n
  • Fully diluted shares<\/li>\n\n\n\n
  • Outstanding shares<\/li>\n\n\n\n
  • Shareholder names<\/li>\n\n\n\n
  • Stock option plans<\/li>\n\n\n\n
  • Unissued shares<\/li>\n<\/ul>\n\n\n\n

    When should you update a cap table?<\/strong><\/h4>\n\n\n\n

    Cap tables should be updated with every additional round of funding, as well as whenever new stocks are issued, stock options are changed or stocks are transferred from one owner to another. You should also update them if employees are terminated or retired.<\/p>\n\n\n\n