Skip to content
Introduction to Company Funding: Key Concepts and Sources | Sprout

Back to all insights

Cap Table Checklist – How to Manage Your Cap Table

Effective cap table management is crucial for any startup looking to maintain clear ownership records and make informed decisions. This comprehensive checklist will guide you through the key steps to manage your cap table effectively.

Why Cap Table Management is Important

A cap table provides a clear view of the company’s equity distribution among founders, investors, and employees. Proper management ensures accurate records, compliance with regulations, and supports strategic planning.

Cap Table Management Checklist

1. Regular Updates:

  • Update your cap table promptly to reflect new stock issuances, option grants, and ownership changes.
  • Schedule periodic reviews to ensure all information remains current and accurate.

2. Detailed Shareholder Information:

  • Maintain comprehensive details for all shareholders, including names, contact information, and equity types.
  • Classify equity stakes by type, such as common stock, preferred stock, and options.

3. Track Ownership Percentages:

  • Calculate each shareholder’s percentage ownership accurately.
  • Regularly review and adjust ownership percentages as new shares are issued.

4. Document Vesting Schedules:

  • Clearly document vesting schedules for employee stock options and founder shares.
  • Track vesting milestones and update the cap table accordingly.

5. Valuation and Price Per Share:

  • Record the company’s valuation at different funding stages.
  • Keep track of the price per share for each round of funding.

6. Compliance and Reporting:

  • Ensure the cap table complies with relevant securities regulations.
  • Prepare necessary reports for investors, regulatory bodies, and internal use.

7. Scenario Planning:

  • Use the cap table to model potential scenarios, such as new funding rounds or employee exits.
  • Analyze the impact of these scenarios on ownership and dilution.

8. Secure Access:

  • Protect sensitive cap table information with secure access controls.
  • Limit access to authorized personnel and stakeholders.

9. Professional Guidance:

  • Consult with legal, accounting, and financial professionals to ensure compliance and accuracy.
  • Seek expert advice when making significant changes to the cap table.

Common Mistakes to Avoid

1. Neglecting Updates:

  • Failing to update the cap table regularly can lead to inaccuracies and confusion.

2. Overcomplication:

  • Keep the cap table straightforward and easy to understand. Avoid unnecessary complexities.

3. Inaccurate Data:

  • Ensure all data entered is accurate and regularly verified.

4. Lack of Transparency:

  • Maintain transparency with stakeholders by providing regular updates on the cap table.

Conclusion

Proper cap table management is essential for any startup. By following this checklist, you can ensure accurate equity tracking, compliance, and informed decision-making. A well-maintained cap table supports your startup’s growth and success.

Copyright © Roots Technologies