Cap table is a term that is part of the daily life of founders and startup leaders. Short for “capitalization table”, it refers to the document that details the corporate structure of the company, i.e., the participation of each shareholder in the business, including shares and equity value. Learn more about how it works and stay up-to-date on the best ways to manage your startup’s cap table!
What is a Cap Table?
Cap tables are essential for managing a startup, as they provide a complete view of the business, its investors, and the percentages of each of them. In addition to founders, shareholders and potential investors can track the corporate distribution through the document, commonly created in a spreadsheet – hence the inclusion of the word “table” in the term.
Through the cap table, investors can see the percentage they hold in the company, how and when they receive their shares, and how the exit – investor exit if the company is sold or goes public – is done.
3 reasons to have a Cap Table
In addition to maintaining control of the business and allowing a general overview of the shareholder structure for investors, it is essential to keep the cap table organized for a few more reasons.
1.Transparency
Through the cap table, shareholders and future investors can have clear information about the business, ensuring transparency for those involved about their growth and profit possibilities.
2.Startup Growth
As the company grows, new investment rounds are made, and new investors become part of the shareholder structure. The cap table becomes more complex and, at the same time, more important to keep the business under control.
3.A person or entity can have more than one share
The cap table details this type of information and keeps track of each investor’s actions, even if they have invested in the startup more than once or have more than one share.
How to make a Cap Table?
A cap table can be made manually in a spreadsheet, with the help of a template, or you can use platforms to manage it.
A cap table made in an Excel sheet can become difficult to handle as the startup grows and receives more investments. This is because it depends on manually updated data and responsible individuals who have an excellent organization method to keep track of all important information.
Therefore, it may be interesting to rely on platforms that offer software for cap tables, such as Carta. This way, it’s possible to have automatic updates and an interface designed to bring transparency to the data contained in the document.
Trace has partnered with Carta, a leading platform for equity management, cap table, and liquidity (stock options and company shares), a powerful tool for startups, with approximately 30,000 companies as customers and more than 4,500 funds representing around $92 billion in assets.
What are the advantages of the Trace and Carta partnership?
At Trace, we are committed to strengthening the Latin American startup ecosystem, and our partnership with the platform is another step in that direction.
We went beyond our core business to bring the best equity management solution to our network, which can rely on the leading platform for equity management and take advantage of special hiring conditions.
Trace’s customers can hire Carta with a 20% discount during the first year and are exempt from implementation fees. This benefit represents more than $20,000 in savings for startups!
If you are already our customer, request your discount at contact@trace.finance. If you are not yet part of our network, learn how we can also contribute to your startup’s journey – talk to our team!
