One simple way to understand what is Cap Table. it shows who owns the Company and what is the pie of the total company’s worth is each individual holding. All the securities, shares, warrants, convertible notes, ESOPs, etc.
Cap Table contains the list of individuals or shareholders of a company on an outstanding or fully diluted basis. Who owns what and in which form is another simple version of explaining the Cap Table.
For Example – there are 3 founders in a start-up and their ownership or shareholding in the company is divided at 40:30:30 (holding shares as 40k, 30k, and 30k respectively). So the simplest form of a Cap Table can be like this:
|Shareholders||No Of Shares||% Of Stake|
The above example is how a traditional cap table looks like when we prepare the same manually on an Excel or Spreadsheet, Now let us see the below Cap Table on how it will look in a Digitized environment with Vega Equity:
The Cap Table is a statement that tells the % stake every promoter or founder or investor holds in the company at a given point in time and the stake of ownership is required in many corporate matters (voting rights, passing a resolution, critical decision-making, fundraising.
It is also helpful for a new or prospective investor in any startup or company as with the Cap Table the upcoming investors can get a taste or glimpse of the existing shareholding in the company and this will also help the investors in knowing who all are current stakeholders in the company, what is their individual o/s or diluted shareholding, how much my % of holding will be in the company post the funding round and much more.
On the other hand, the founder can check the cap table to understand how much can be diluted in the future round of funding and which investors should be invited first, and what % of stake can be given to any new or existing investors post the financing round. They can also check what are the terms & conditions in respective SHA (Shareholding Agreement) with different investors/shareholders.
How you want to manage the Cap Table is also based on the stage of your organization (Early Stage, Seed Stage, Series A, B, C, etc.)
You can create the same at an early stage on an Excel Sheet or G-Sheet (Download our Free Template), but once more and more investors start coming on to your cap table then it becomes very complex to manage and have an up to date Cap Table on real-time basis catering to all the requirements from Compliance, Taxation, Investors, etc.
Once you start growing or expanding your business, raising money in frequent tranches and rounds, the best solution to your challenges will be to have an Equity Management Platform. This will help you in sending faster updates to your investors as and when required and better transparency & real-time visibility can be provided to all the stakeholders.
If the company were a movie, the Cap Table would be the credits at the start and the end as to who had what part in the film. We have spoken about Cap Table quite a lot, but we still feel it is lesREAD MORE