Free cap table template: guide & example
At Ramp, we understand that startups need to keep track of a lot of different things, including their equity ownership structure. This is where a cap table comes in handy. A cap table, short for capitalization table, is a document that outlines who owns what percentage of a company's equity, and what that equity is worth.
In this comprehensive guide, we'll provide you with all the information you need to create and maintain a cap table for your startup, including our free cap table template.
What is a Cap Table?
A capitalization table, also known as a cap table, is a document that shows the ownership structure of a company by detailing the different types of shares and who owns them. It provides a summary of the company's equity ownership, including the total number of shares issued, outstanding, and available for issuance.
Why you need a cap table
As a startup, you're likely going to be raising capital from investors at some point. When you do, you'll need to be able to show them who owns what percentage of your company, and what that ownership is worth. This is where a cap table comes in handy. A well-maintained cap table can help you:
- Understand your company's ownership structure
- Keep track of equity grants and options
- Make informed decisions about raising capital
- Prepare for an exit event, such as an acquisition or IPO
Understanding the components of a cap table
A cap table can be a complex document, but understanding its components is essential for any startup founder or investor. Here are the key components of a cap table:
Share classes - Share classes represent different types of stock, such as common stock or preferred stock. Each share class has different rights and privileges, such as voting rights or dividend preferences.
Authorized shares - Authorized shares are the maximum number of shares a company can issue. This number is determined by the company's articles of incorporation.
Issued shares - Issued shares are the number of shares a company has actually issued to shareholders. This includes both common and preferred shares.
Outstanding shares - Outstanding shares are the number of shares that are currently held by shareholders. This includes both issued shares and shares that have been repurchased by the company.
Equity grants and options - Equity grants and options are agreements that allow employees or other stakeholders to purchase shares of stock at a set price. These agreements can have a significant impact on a company's ownership structure.
Convertible debt - Convertible debt is a type of debt that can be converted into equity at a later date. This can have a significant impact on a company's capitalization structure.
Shareholder information - A cap table should also include information about each shareholder, such as their name, contact information, and the number of shares they own.
Keep in mind that it's important to update your cap table regularly to reflect any changes in your company's ownership structure, such as new equity grants or options being issued.
How to create a cap table
Creating a cap table can be a daunting task, especially if you're not familiar with the process. Here are the steps you need to follow to create a cap table:
1. Gather the necessary information - Before you start creating your cap table, you'll need to gather information about your company's equity ownership. This includes information about any equity grants or options that have been issued, as well as any outstanding debt or convertible notes.
2. Determine your ownership structure - Once you have all the necessary information, you'll need to determine your company's ownership structure. This will involve determining how many shares of stock your company has authorized, issued, and outstanding, as well as who owns those shares.
3. Create the cap table - With all the necessary information in hand, you can now create your cap table. This can be done manually, using a spreadsheet, or with the help of cap table software.
4. Maintain the cap table - Once your cap table is complete, it's important to keep it up to date. This means updating it whenever there are any changes to your company's equity ownership structure, such as new grants or options being issued.
Example of a cap table
For a clear is an example of a cap table, please download our free cap table template above. This cap table example will demonstrate how different components work together to show the ownership structure of a company.
How to use our free cap table template
To help you get started with creating your own cap table, download our free cap table template above. Our template includes all the necessary fields for tracking equity ownership, as well as instructions for how to use it.