CAP TABLE OR CAPITALISATION TABLE

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A startup's cap table shows the capital structure of the company from its inception to the present. This includes information on issued shares, investors, voting rights and call options. A startup's cap table is often dynamic and can change as the company receives funding and grows. Es important for a start-up because it allows investors, shareholders and founders to have a clear view of the capital structure and shareholders' rights. It is also useful for making financial and strategic decisions, such as issuing new shares, acquiring other companies or exiting investors. In short, the cap table is a key tool for the management and financial planning of a start-up.

The capitalisation table or cap table shows who owns the equity capital of a startup. That is, who are your partners and what are their percentages of participation. This is usually presented in an Excel sheet.

 It is essential to know the composition of the company's share capital.

Therefore, the Cap Table is a document which contains a x-ray of the structure at the moment. It is essential to know if there is a balance between partners before making an investment decision.

What does the Cap Table indicate?

• Percentage of each partner.
• Total equity holdings of a company.
• Number of shares of each partner.
• Valuation of the different investment rounds.

When a company is formed, the official documents to be signed (Memorandum of Association and Articles of Association) are no mention of company percentages. It simply means that a given shareholder takes up "X" number of shares, out of a total number of shares that make up the share capital, for a value of "Y".

Cap Table and its importance

Many entrepreneurs are not very familiar with the term. Knowing and understanding it is paramount, as it is a tool essential to know the impact that the funding received will have on the equity ownership of the Startup. It affects both control (decision making) and economic aspects (possible exits). It is important to be attentive to the valuations and to keep a close eye on the decimals; any modification may imply substantial changes.

Cap Table Analysis

Studying the Cap Table allows the potential investor to be aware of the development of the company capital structure and dilution investors have taken on throughout its growth.

In addition, this allows you to anticipate the impact that future rounds of funding would have on that structureHow much capital would he need to put up to get a good piece of the pie, or what dilution he will face if the project goes ahead but needs to close larger rounds of financing to succeed.