Athena In Action December 5, 2019

Salon Highlights: Cap Table Basics

By The Athena Alliance

Athena members recently joined Shelley Perry, operating partner at Insight Partners, to learn the financial basics necessary for board service. The first virtual salon in the new Finance for the Non-CFO series taught Athena members the basics of Capitalization Tables, often referred to as simply “Cap Tables.” A cap table is a chart showing the breakdown of equity and ownership among shareholders. 

Learn the importance of understanding the cap table, what a cap table typically looks like, and when to create a cap table in the evolution of your company in our summary below. Members can view the full salon recording in the Resource Library.

  1. How is the cap table used? Your cap table impacts everything from how you approach future fundraising rounds to the decision-making matrix for your company. Entrepreneurs may use a cap table when they are starting a company or raising a round of funding. Employees may use it to determine equity in compensation, voting rights, or governance issues. A hiring manager may use it to make a competitive offer to a new hire. In a merger or acquisition, the cap table establishes guidelines around ownership and voting rights.

  2. What’s included on a cap table? A cap table will list the names of the founders, investors, and other shareholders and details of their ownership stake. This will include types of securities, how many, vesting schedule, and ownership percentage.

  3. When is the cap table created? The table is typically created at the start of a company or, at the latest, when a company brings on a second owner. The cap table changes any time there is an ownership change, including bringing on new investors, liquidity events, founder or key employees exiting, the creation of a restricted stock (RSU) pool, or a change in valuation.

  4. How is the cap table used in fundraising? Investors are primarily looking at the complexity of your ownership structure when they are considering your venture for funding. As Shelley explained, “The more complex your cap table already is, the more difficult it will be to get a deal.”

Athena Virtual Salons offer members the opportunity to learn boardroom and leadership best practices. Cultivate your strength as a leader and connect with other women executives by joining Athena.