You’ve likely heard the term "cap table" thrown around… but what exactly *is* a capitalization table and how do you read it? Let's #BreakDownVCJargon and get into it 🤓 📚
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A cap table documents who has ownership in a company, how much, and what kind. It lists all shareholders + the total # and value of the company’s securities — usually a mix of common & preferred stock, options, warrants, SAFEs, and/or convertible notes (more on this on Thurs 😉)
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A cap table also includes valuation details of the company's last priced round (if applicable) and how many shares are reserved for future employee or advisor stock options.
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These spreadsheets are critical for helping investors and founders make informed decisions based on the company's ownership. Founders may use cap tables to determine how much equity to grant new hires or to ensure all voting shareholders are looped in to important company updates
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Investors may use a cap table to decide how much money to invest in a company, based on the VC's ownership and IRR targets. They also use it to better understand who is in the founders' corner, how committed founders are to the company, and what future dilution will look like 💸
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⚠️Warning⚠️ investors tend to get spooked out by messy cap tables, or ones with lots of SAFEs and dilutive events on the horizon. It's important when fundraising that founders be able to speak to how they've chosen to manage their cap table and allocate ownership of the company
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At BBGV, we believe in teaching a wo(man) how to fish, so we created this Cap Table template as a resource to help you get a start on modeling your company's ownership:
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Our friends over at also have a fabulous, new Equity 101 course to help startup founders and employees understand the ins and outs of equity:
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Tomorrow, we'll #BreakDownVCJargon on dilution and pro-forma cap tables to have you talking about your company's ownership with ease and finesse 💁♀️
