A cap table, short for capitalization table, is a document that outlines the ownership and equity structure of a company. It typically includes a list of all the company's shareholders, the type and number of shares they own, and the corresponding percentage of ownership each shareholder holds.
The cap table is an important tool for startups and other early-stage companies, as it provides a clear overview of the company's ownership and equity distribution. This information is crucial for decision-making, as it can affect the company's valuation and the allocation of voting rights and dividends.
The cap table is also an important tool for investors, as it provides information on the types of securities the company has issued, the price at which they were issued, and the terms of the securities. This information can be used to evaluate the potential return on investment, and to understand the rights and obligations of the various classes of shareholders.
The cap table is typically updated as the company raises additional funding, issues new equity, or experiences other changes in its ownership structure. It is important for the cap table to be accurate and up-to-date, as it can have significant legal and financial implications for the company and its shareholders.
Overall, the cap table is a crucial document for startups and other early-stage companies, as it provides a clear and comprehensive overview of the company's ownership and equity structure. By understanding the information contained in the cap table, entrepreneurs and investors can make informed decisions and plan for the future growth of the company.