A capitalization table, also known as a cap table, is a spreadsheet or table that shows the equity capitalization for a company. A capitalization table is most commonly utilized for startups and early-stage businesses but all types of companies may use it as well. A basic capitalization table lists out each type of equity ownership capital, the individual investors, and the share prices. A more complex table may also include details on potential new funding sources, mergers and acquisitions, public offerings, or other hypothetical transactions. Below is one example of a capitalization table. Overall, a capitalization table shows the total market value of a company and its components.
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CAP TABLE # The ESOP sheet of the cap table -
A pre-investment cap table or capitalization table is simply a list of shareholders and their shareholdings in the stock of a company prior to any investment being made. When a startup business is established as a company the founders are normally granted common stock to reflect their relative ownership of the company. The number of shares each founder gets is decided on between the founders depending on their contributions in terms of cash investment, expertise, commitment and risk, responsibilities and the amount of time they invest at reduced or zero paid salary. Our startup equity calculator is available to help you decide on the equity split between founders. The legal formalities for establishing a company include defining the maximum number of shares the company can issue, this maximum is referred to as the number of authorized shares. The authorized shares can then either be issued to shareholders or remain unissued and available for a later date. It is the number of issued shares held by each shareholder which determines their percentage ownership.
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Founder Toolkit. September 3, Every startup needs a capitalization table, or cap table as it's commonly known. But, because they involve so many technical financial terms, setting up and maintaining a cap table can be a daunting prospect for startup founders.
The word "capitalization" can have many meanings in small business. It's used in accounting to describe the cost of equipment that's written off as depreciation over time. It also describes the conversion of retained earnings into capital and the conversion of an operating lease into a capital lease.