Thinking about “Cap Tables”


Cap Table

simple example of cap table

Credit: Pillar VC

As an advisor to Founders from a variety of industries, I have been thinking recently about “Cap Tables” and why every start-up should have one. That includes self-funded start-ups and especially companies which have more than one Founder.


A “Cap Table” is and will be the permanent record for every equity and shareholder loan to the company. It is the financial spinal cord for your company and will be critical every time you raise capital, incur debt, or need to value the company.

One of my clients just had a situation that could have been avoided if his “Cap Table” was current. Working on that issue is what got me thinking about “Cap Tables” and to remind readers to check on their “Cap Table”.

 What is it?

A “Cap Table” can be as simple as a hand-written ledger or as complicated as a hosted product  supplied by a 3rd party that has all the bells and whistles your lawyers and accountants could wish for. Regardless of which side of the spectrum you fall on, the two critical points are: 1) that you have one and 2) that it is current at all times.

Why your cap table needs to be up to date list of reasons


The “Cap Table” must contain each transaction along with pertinent detail. For example, during your seed stage, there will be the date, the name of the investor, the number of shares, the amount paid, the valuation used and the percentage of ownership the shares represent. There should also be comments if the shares are voting or non-voting, entitled to dividends, etc.

What it is not!

A “Cap Table” is only a record of ownership in your company. It is not an offering memorandum and it is not a partnership agreement between you and your fellow founders, nor is it a Succession Plan. As detailed in our blog: 5 Things to think about when you need to add a Partner these are  documents that are essential to have, but their purpose is to provide you with protection if things go wrong. The “Cap Table” is only a list of shareholders.

When do I start making a “Cap Table”?

Salvador Dali Painting regarding Time


Timing is everything –  A “Cap Table” cannot be an afterthought when starting a company. It is in your best interest to think about it even before you spend money on incorporating your business. The reason is that you need to think long-term about your business, its success and its need for funds. You will have to make decisions about debt vs. equity, the type and number of shares issued vs. authorized, warrants, convertibles and options.

Having a clear vision of what your “Cap Table” will look like, prevents you from making errors such as giving away too much equity to advisors, being too cheap or too generous when awarding options to potential employees, or other mistakes. In your mind you will need to see the structure of your company from day one until the day you go public or sell out.


A “Cap Table” is a useful tool for keeping track of your companies shareholders and your own stake in the company. Most important, when you decide on taking on additional funds, you can see at a glance what the implications are regarding dilution, taxes and valuation. What is critical, that either you, your accountants or your lawyers keep it up to date. A “Cap Table” only works if it is current at all times.


List of Cap Table Mistakes



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