A capitalization table, also known as a "cap table," is a financial document that shows the ownership structure of a company. It lists all the shareholders of a company, the number of shares they own, and the percentage of ownership they hold. It also includes information on the company's outstanding equity, debt, and options.
The cap table is an important tool for startups, as it helps them to understand the equity ownership of the company and the dilution of the existing shareholders due to new investments. It also helps them to track the changes in the ownership structure of the company over time, such as new investments, dilution, or buybacks.
A typical cap table would have the following information:
The name of each shareholder, along with the number of shares they own and their percentage of ownership.
The type of shares owned by each shareholder, such as common or preferred shares.
The valuation of the company and the price per share.
The number of shares outstanding and the number of shares reserved for options or future employees.
Information on any convertible debt or warrants that the company has issued.
Cap tables are typically created and maintained by the company's finance or legal department but can also be created by an external accounting firm or an online service.
It's important to note that a cap table is a living document and must be updated regularly as the company raises new rounds of financing or issues new equity.