CAPITALIZATION TABLE
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A table showing a company’s ownership structure—equity classes, share counts, and investor stakes.
Summary
A capitalization table (or 'cap table') is a detailed spreadsheet that tracks who owns what percentage of a company and how that ownership might change over time. Think of it as a company's ownership family tree that shows not just current shareholders, but also potential future owners through stock options, warrants, and convertible securities. It's essential for understanding how investment rounds, employee stock options, and other equity transactions affect everyone's ownership stakes.
Usage Context
Critical when studying startup financing, venture capital, corporate finance, and equity compensation structures. Essential for understanding investment terms, valuation negotiations, and exit scenarios.
Common Confusions
- Confusing current ownership with fully diluted ownership percentages
- Not understanding how new funding rounds dilute existing shareholders
- Thinking all shares are the same (missing preferred vs common distinctions)
- Overlooking employee option pools when calculating ownership
- Misunderstanding how convertible notes affect the cap table
