Cap table best practice

A cap table is an overview of a company’s total equity structure and can be organized in various ways. Often, it’s a spreadsheet containing key data related to the current ownership in the company and the future ownership based on forthcoming funding rounds. It is one of the primary points of communication for investors, the company, and the founders, so how it is structured and maintained will have significant implications for investor relations, especially during fundraising processes.

Cap table vs share register

One common misunderstanding is that the cap table is the same as the share register. This is incorrect. The cap table is not the same as the share ledger and serves a different purpose. The share ledger is a legal document that reflects the current shareholdings in the company. The cap table, as described above, is an overview of the total equity structure and can be customized to show key data related to the current ownership and future ownership based on upcoming funding rounds.

What should you consider to impress rather than annoy investors?

The cap table is an optional document, and as such, it can be designed according to your preferences. There are many ways to format and manage a cap table. However, several methods and inputs are particularly appreciated by shareholders, investors, and potential investors, just as many aspects are disliked if handled poorly. Here is a guide based on 16 years of observing how investors respond to various types of cap tables from companies and founders. Some points may seem obvious, but others might be thought-provoking and inspire improvements in your cap table management going forward.