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Venture Deals

What is Capitalization (Cap) Table

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May 03, 2023
What is Capitalization (Cap) Table
1 answer
Neal Strickberger
Accepted Answer
May 03, 2023
A spreadsheet that breaks down who owns what in a startup. This may also include the calculations for ownership, dilution and liquidity for previous and future rounds.
A well structured cap table is extremely important and should be reviewed by investors as part of a due diligence process:
  • Capital journey:  is there adequate equity for future rounds of fundraising, do the founders and key stakeholders maintain meaningful ownership, or will some significant dilution be required?
  • Transparency - who are the current and previous investors, are there any with controlling positions (how are thier interests aligned?), are there any indications of disproportionate ownership positions or inconsistent valuations?
  • Is there an adequate employee option pool?
  • If the cap table is sub-optimal it can be a significant barrier to investment - it is better to fix this sooner rather than later.
A useful resource is the Cap Table and Exit Waterfall Tool Excel model from https://foresight.is/cap-table/

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