Cap Table: Template and Examples

In this article we describe the basic concepts of a cap table, what it is used for and what data is required.

What is a Cap Table?

In a company, the cap table or capitalization table is a document that details how many shares and of what type each shareholder has. It is usually managed by the management team or founder, with the support of lawyers.

The cap table shows the different types of participations or shares: ordinary, preferred... and also those issued as compensation to the team such as stock options or ESOP.

What Details Should a Cap Table Include?

A company cap table shows the different types of holdings on the X-axis and the names of the corresponding shareholders on the Y-axis.

As a company grows and receives external investment, different types of participations are usually created to reflect the different rights and obligations. When it's born, a startup has the same type of common shares for all shareholders, but new types can be added (seed, preferred...) over time, when new investors become part of the cap table.

It is important to list each partner or shareholder separately in a column, as it will allow us to calculate majorities and have better visibility of the shareholding distribution. If the company has convertible loans or employee incentive plans, whether they are phantom shares, stock options or ESOPs, we also have indicate this in the cap table and it will lead to the valuation and fully diluted cap table. The fully diluted valuation takes into account the commitments acquired in the future but not yet materialized, such as incentive plans and convertible loans. At the time of the sale of the company, these commitments materialize in shares or economic rights.

The complexity of a cap table evolves with the company:

  • At the idea stage, the founders are the only shareholders, with no vesting schedules and only common shares.
  • Once the startup has been incorporated, the cap table may be getting a bit more complex as more details are added, such as the date of incorporation, the total number of shares, the number of shares issued to shareholders, including their issue dates and respective vesting schedules, etc.
  • Following the company growth, the employee incentive plan becomes an important factor influencing the cap table, since 10% of the share capital is usually set aside to be allocated to founders or key employees.
  • When professional investors or corporate partners are incorporated in the cap table, the cap table gets more complex with different share classes, vesting schedules and voting powers.

What Is the Purpose of Cap Tables?

The main function of the cap table is to show the percentage of ownership of the company, both to current partners and potential investors. It is essential to have the updated cap table when seeking financing, since all venture capital firms request it in the initial stages and also during due diligence.

Cap Table Online Calculator

Investors, advisors and lawyers are starting to ask companies they work with to have a digital cap table. The benefits are endless: efficiency, avoiding calculation or Excel issues, etc.

That's why Capboard has created an easy to use, free cap table generator for early stage startups. You can test it without having to sign up here.