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What Is a Cap Table? Creation & Management Guide

Joe Brennan
Content and Communications Lead
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A cap table is where a company keeps track of all its different owners. Careful cap table management can help companies keep tabs on the different groups of people who own pieces of the business. Here's your guide to creating and managing cap tables like the best.

What is a capitalisation table?


A cap table – short for capitalisation table – is the register of a company's owners. You can represent your capitalisation table on a spreadsheet, or it can be maintained using software. A cap table breaks down the different types of stock and ownership in the company, listing the holders of preferred and common stock, convertible notes, share option grants, and so on.

Here's an example of a capitalisation table as displayed on Ledgy, showcasing the different groups of owners and their share ownership stakes:

Sample cap table dashboard on Ledgy

Why do you need a cap table?

Capitalisation tables help simplify the administrative complexity in companies with many different owners. A well managed cap table is especially important for companies that are expanding quickly, because these companies often welcome many new owners on to the cap table in a short space of time.

For instance, a startup might begin life with two co-founders who each own 50% of the business. But as the startup grows, the founders might grant share options to the first employees who join the company. Then, they might think about fundraising from venture capital (VC) investors. Each new stakeholder, whether it's an individual or an institution, needs to be represented on the cap table.

The reason each ownership stake needs to be represented on the capitalisation table is because when new owners acquire shares in the company, the stakes of other groups can be diluted. If a new investor acquires a 10% stake in a company, each pre-existing owner will henceforth own a slightly smaller piece of the pie. Financial milestones like a new funding round, a new convertible note, or new employee option grants could all change the ownership stakes of existing shareholders.


How to create a cap table

The good news is that if your company is at a reasonably early stage, it's not difficult to get started creating your capitalization table. But there are a few key steps to get right as you set everything up.

Decide who owns the task of cap table management

Before everything is up and running, it's important to decide who in the company is going to have overall ownership of the cap table.

At an early stage, it'll almost always be one of the company's founders. As the chief executive officer (CEO) is responsible for fundraising and usually has the strongest relationships with investors, cap table management will often be the responsibility of the CEO.

In later stage companies, it becomes more important to manage many different groups of stakeholders. Over time, companies may need to conduct more sophisticated analyses using cap table data, such as scenario modeling for future exit and liquidity events. In these circumstances, managing the cap table may become the responsibility of the most senior finance leader, such as the chief financial officer (CFO) or the vice-president (VP) of finance.

Use an equity management platform

Learn more about our equity management platform

Cap table management software gives you better information security and helps prevent data entry errors that can have significant consequences down the line. In addition, software like Ledgy gives you the ability to plan complex scenarios and do the heavy lifting with cap table calculations.

Separate out your stakeholder groups

It's vital to clearly segment the different groups of owners on your cap table. For instance, employees with common shares and/or stock options usually need to be treated differently to investors with preferred shares.

Think about your team members in different countries

You may need to treat shares and share options owned by employees differently depending on which country they're in. For instance, employees in Germany might expect virtual or phantom shares, which behave very differently to the share options people normally receive in other markets like the US or UK. In this circumstance, it is beneficial to set up a broad pool of employee shares and share options, that can then be broken up into different share plans representing different types of equity grant.

Account for any convertible debt

Not all ownership stakes are alike. Take convertible notes, for example. A convertible loan note is initially classed as debt, so it wouldn't appear on the cap table. But convertible notes are designed to convert (get it) into equity depending on the performance of the company. (Read more about how convertible notes are represented on Ledgy here.)

If this happens, the note needs to be represented on the cap table. To make sure this doesn't take you by surprise, it's wise to have a section adjacent to your cap table reserved for performance-related debt that may become an equity stake in the future.

Cap table management makes a big difference to investors

When you begin talking to potential investors ahead of a financing round, it's imperative to present information on your company's ownership clearly and concisely. If you aren't sure about actual ownership percentages of your shareholders, it can slow down the process and risks giving investors a negative impression of your corporate governance.

Exit planning

It's vital to carefully model the implications for all shareholders in the event of an exit. Do investors have liquidation preferences that could limit other shareholders' financial outcomes at a certain valuation? Will you set up accelerated vesting for employees depending on when the exit takes place? You can even go a step further using software like Ledgy, modeling optimistic, 'base case' and pessimistic scenarios that take different exit valuations into account.

Cap tables are constantly changing

Capitalization tables might look like static snapshots of a company's ownership. But as companies grow and move through different funding rounds, new investors come on board. And as you expand internationally, the employee ownership pool needs to change and evolve. When executed well, your capitalization table becomes a dynamic, living document that has a material impact on your financial decision-making.

An automated platform for cap table management

In high-growth startups, cap table management isn't just about recording stock ownership and keeping a neat list of your owners. A clean, interactive cap table can speed up investor conversations during fundraising processes. And your cap table can give company leadership more clarity on the proceeds for different groups of owners in different exit scenarios.

Managing the strategy and calculations associated with financing rounds in spreadsheets increases the likelihood of making human errors that have real consequences, both for shareholders and for the internal teams dealing with any inconsistencies. To make matters worse, it's difficult to retain a single source of truth in spreadsheets that might be moved around different teams and shared with investors, accountants and lawyers.

As a secure software platform that lets you model the impact of different financial decisions in real time, Ledgy is the modern capitalization table solution for scaling businesses.


1. Why do startups need cap tables?

Startups need cap tables to provide a 'source of truth' overview of the company's owners. Without a cap table, companies will find it extremely difficult to engage investors and have open conversations about fundraising. Cap tables also mean companies can monitor employee ownership in more detail: which employees own shares and share options, how employee ownership might change in the future, and so on.

2. What is a visual cap table example?

Below is an example of part of a capitalisation table as it appears on Ledgy. We put a lot of time and effort into making your record of owners simple, interactive and dynamic. You benefit from a clear breakdown of the most important ownership groups on your cap table, as well as key metrics such as your latest valuation and the number of issued shares.

You can drill down into each group – say, your employee shareholders – and see in more detail who owns what percentage of the business, the value of individuals' stock options, and much more.

A breakdown of cap table ownership groups, as seen on Ledgy


A cap table – short for capitalisation table – is the register of a company's owners. You can represent your capitalization table on a spreadsheet, or it can be maintained using software. A cap table breaks down the different types of stock and ownership in the company, listing the holders of preferred and common stock, convertible notes, share option grants, and so on.
Joe is Ledgy’s Content and Communications Lead. He has over a decade's experience working in marketing and communications for scaling tech companies and global professional services firms.

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