How to Read and Understand a Cap Table

By Debby Winters

I have a lot of clients who ask about how to read and understand their Cap (capitalization) Table. I recently read a post that I’m going to direct you to that I think is well written and explains, with examples, not only how to read your cap table, but also how to understand it.  For those readers who are not familiar with a Cap Table, this is an actual table that “takes all of the shareholders in your business and lays out who owns what, how much each one owns, and what value is assigned to the stock they do own.”

This is what the Cap Table will look like.

As you can see each Shareholder- Founder or Investor- has a column for how much they have contributed and what % they own from that contribution. Each time a new round of investment is undergone each Shareholder has a “pre-” and a “post” column. The “pre” column tells the Shareholder her % ownership or shares as the finances stand now. The “post” column tells the Shareholder her % ownership or shares after the new round is completed.
In addition to going through the Cap Table, this post tells you how to read and understand the term sheet.
If you are interested in investment in startup companies or any company, or just understanding some of the financing behind this, check this post out for more details.