Cap Table Template Download

A capitalization table, more commonly known as a cap table, is a ledger that outlines the equity ownership of a company. It presents a detailed summary of a company’s percentages of ownership, equity value, and shareholder information, along with details about stock prices and issued equity. 

Startups and entrepreneurs use cap tables to keep track of the exact equity ownership within their company, which is particularly important when planning and executing decisions related to equity distribution, fundraising, or selling the business. They use it to understand the implications of future fundraising events, share issuance, or company sales on the distribution of ownership, hence, helping them in strategic decision-making. It provides a clear snapshot of the company’s shareholder structure and facilitates transparency during discussions with potential investors, and stakeholders, or in the event of a company sale.

Find out more about what a cap table is and how to use one.

A cap table template is a spreadsheet or document that outlines the ownership structure of a company. It includes information about shareholders, the number of shares owned, the percentage of total ownership, and the equity dilution over multiple funding rounds.

The cap table is often used during negotiations with potential investors, as it provides a clear picture of the company’s equity structure. 

The tool is essential during financial transactions like fundraising, equity sales, issuance of new shares, or acquisition, as it helps to maintain an accurate record of ownership and allows for the proper allocation of company profits and exit proceeds.

For startups, a cap table shows investors who the key stakeholders are, the percentage of equity they hold, and how their potential investment could dilute these stakes.

The cap table also serves as a tool for negotiation during investment discussions. By showcasing existing ownership distribution, it becomes easier to forecast the effect of new investment on the equity structure, aiding in the valuation process.

Additionally, a well-maintained cap table demonstrates effective management and professionalism, which can boost investor confidence. It shows that the startup’s management is cognizant of the details of their business, understands the importance of equity distribution, and is capable of handling complex equity transactions.

The cap table is also vital for ensuring legal compliance during fundraising rounds. It helps maintain an accurate record of all equity transactions, providing the necessary documentation for regulatory purposes and minimising potential legal disputes about ownership.

Step 1: Understand the Layout

Before using a cap table, familiarise yourself with its layout. A standard cap table typically includes information on shareholders (which can be individuals or entities), the number of shares owned, types of shares (common, preferred, etc.), and the percentage of total company ownership each represents.

Step 2: Input Founders’ Equity

The first entries in your cap table should be the equity holdings of the founders. Record each founder’s name, the number of shares they own, and calculate the percentage of ownership this represents.

Step 3: Account for Employee Equity

Enter any equity you’ve allocated to employees, either through employee stock options or other forms of equity-based compensation. These should be recorded separately, and it is important to keep track of vesting schedules.

Step 4: Input Investor Equity

Next, list any investors and their equity stakes. This could include angel investors, venture capital firms, or other entities. Be sure to include details of the type of equity they hold (common shares, preferred shares, convertible notes, etc.).

Step 5: Track Changes Over Time

As your company evolves, there may be new equity issuances, stock option exercises, further funding rounds, and so on. Update your cap table accordingly to reflect these changes. Keeping your cap table current is critical, as it can affect decision-making processes.

Step 6: Predict Future Scenarios

Use your cap table to model future scenarios, such as the issuance of new shares or a new funding round. This can help you understand the potential dilution impacts on existing shareholders.

Step 7: Share With Stakeholders

A cap table is not only a tool for internal use but also a critical document during fundraising or acquisition discussions. It should be shared with potential investors, existing shareholders, or other interested parties as part of these conversations.

Remember that a cap table is a living document that should be maintained and updated regularly to ensure it accurately represents the current equity structure of your company. Regular updating is necessary for sound decision-making and maintaining transparency with stakeholders.