Cap Table 101
Written by Kevin Lu
If an idea was good enough, and the team strong enough that they didn’t require a pitch deck or a product demo, VCs would still require this one document — a Capitalisation Table (often shortened to Cap Table) — before deciding to invest.
Put simply, a cap table is a register of a company’s shareholders and how much they own. Unfortunately, as a company matures, the cap table develops into a much more complicated beast. But don’t sweat, we will try our best to explain it all in this article.
Other than recording ownership information, the cap table enables investors and founders to calculate their ownership value in various business scenarios, thereby assisting them in negotiations around changes to ownership stake should those events unfold.
Starting from the very beginning, a pre-seed start-up with two equally capable and committed co-founders would likely have both co-founders each owning 50% of the start-up’s shares, so nobody develops a swelling inferiority complex overtime…