{"id":1467,"date":"2019-10-08T00:00:00","date_gmt":"2019-10-08T00:00:00","guid":{"rendered":"http:\/\/www-staging.carta.com\/sg\/blog\/what-is-a-cap-table\/"},"modified":"2021-03-05T06:57:14","modified_gmt":"2021-03-05T06:57:14","slug":"what-is-a-cap-table","status":"publish","type":"post","link":"https:\/\/www-staging.carta.com\/sg\/blog\/what-is-a-cap-table\/","title":{"rendered":"What is a cap table?"},"content":{"rendered":"\r\n

A capitalization table<\/a> (or \u201ccap table\u201d) is a list of all the securities your company has issued and who owns them. Securities include stock, convertible notes, warrants, and equity grants. Here\u2019s what you need to know.<\/p>\r\n\r\n\r\n\r\n\r\n\r\n

Why do I need a cap table?<\/a><\/p>\r\n\r\n\r\n\r\n

What does a cap table look like?<\/a><\/p>\r\n\r\n\r\n\r\n

How do I make a cap table?<\/a><\/p>\r\n\r\n\r\n\r\n

What\u2019s wrong with Excel-based cap tables?<\/a><\/p>\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n

How do I keep my cap table updated?<\/a><\/p>\r\n\r\n\r\n\r\n\r\n\r\n

Why do I need a cap table?<\/a><\/h2>\r\n\r\n\r\n\r\n

Cap tables are important because they tell you who owns how much of your company. This can affect everything from how you price future fundraising rounds to who needs to sign off on major company decisions.<\/p>\r\n\r\n\r\n\r\n

What does a cap table look like?<\/a><\/h2>\r\n\r\n\r\n\r\n

Cap tables usually include a list of names or groups (founders, investors, common stockholders, etc.) on one axis and details around what they own (what type of securities, how many they own, when they invested, what percentage of the company they own, etc.) on the other axis. While there\u2019s no standard format, here\u2019s what one could look like:<\/p>\r\n\r\n\r\n\r\n

Cap table example:<\/h3>\r\n\r\n
\"Example\r\n
Example of a cap table in a spreadsheet<\/em><\/figcaption>\r\n<\/figure>\r\n\r\n

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How do I make a cap table?<\/a><\/h2>\r\n\r\n\r\n\r\n

There are multiple ways to create and manage a cap table. The best option for you depends on your company\u2019s stage and ownership structure.<\/p>\r\n\r\n\r\n\r\n

Use a cap table template<\/h3>\r\n\r\n\r\n\r\n

Startup cap tables usually live in a spreadsheet since ownership is usually relatively simple and easy to track early on. But if you\u2019re creating a cap table for the first time, it doesn\u2019t make sense to start from scratch. Download our free cap table template<\/a> for a good starting point\u2014just know it\u2019s not a good long-term solution, as Excel-based spreadsheets won\u2019t scale with you as you grow.

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Download the template<\/h3>\r\n

[marketo-form marketo_id=”2376″]<\/p>\r\n\r\n\r\n\r\n


Use free cap table software<\/h3>\r\n\r\n\r\n\r\n

Cap tables get complicated quickly<\/a>, so starting with cap table software early in your company\u2019s life cycle can save you time and money as your business scales. With Carta\u2019s Launch<\/a> plan, companies with up to 25 stakeholders that have raised up to $1M can get free cap table management through their lawyers. Talk to your lawyer<\/a> to get started.<\/p>\r\n\r\n\r\n\r\n

Use an equity management platform<\/h3>\r\n\r\n\r\n\r\n\r\n\r\n

Once you begin hiring employees and raising more money, an equity management platform<\/a> is the way to go. Instead of you having to remember to update your cap table and send the latest version to stakeholders, it\u2019ll automatically stay updated as you get new 409As, issue options, offer liquidity, and more. Plus, platforms like Carta can help you stay compliant with regulations like Internal Revenue Code Section 409A<\/a>, Rule 701<\/a>, Rule 144<\/a>, and the $100K ISO limit<\/a>.<\/p>\r\n\r\n\r\n\r\n

What\u2019s wrong with Excel-based cap tables?<\/a><\/h2>\r\n\r\n\r\n\r\n

Traditionally, the legal ownership of a private company \u201clived\u201d on paper shares issued to founders, investors, and employees. Some of the biggest venture-backed private companies<\/a> still have their lawyers issue paper securities and model their cap tables in Excel. However, this method is antiquated and inefficient.\u00a0<\/p>\r\n\r\n\r\n\r\n

There\u2019s no single source of truth<\/h3>\r\n\r\n\r\n\r\n

There\u2019s usually more than one version of a manually updated Excel cap table model. Your attorney manages one copy (for an hourly fee) and you or your CFO manage another version. If an employee joins or exercises options and you forget to send the updated cap table to the lawyer or vice versa, suddenly there isn\u2019t a single source of truth. Mistakes compound and things get complicated.<\/p>\r\n\r\n\r\n\r\n

They\u2019re expensive<\/h3>\r\n\r\n\r\n\r\n\r\n\r\n

It can take your law firm many billable hours to issue option grants taking into consideration all IRS and SEC equity rules. These can add up quickly when it\u2019s time to raise capital. We\u2019ve seen quotes of over $20,000 in legal fees to reconcile different versions of a company\u2019s cap table. Carta\u2019s Launch plan<\/a> is available through law firms and gives companies with up to 25 stakeholders that have raised up to $1M access to cap table management for free.<\/p>\r\n\r\n\r\n\r\n

How do I keep my cap table updated?<\/a><\/h2>\r\n\r\n\r\n\r\n

If your cap table lives in a spreadsheet, you have to be diligent about using consistent names, updating your version whenever something happens, and sending the updated version to relevant stakeholders, like your lawyer.<\/p>\r\n\r\n\r\n\r\n

The easiest way to keep your cap table updated is to use cap table software<\/a>. With transactional platforms like Carta, your cap table updates automatically whenever you issue a security or someone accepts their security. Learn more about our features<\/a>, take a video tour<\/a>, or request a demo<\/a> today.

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JOIN CARTA<\/h6>\r\n

Simplify cap table management with Carta<\/h2>\r\n