Understanding the Significance of Cap Table in Startup Funding

Startup funding is a crucial aspect of every budding entrepreneur’s journey. To successfully raise funds and take their business to the next level, they must have a solid understanding of the Cap table.

The Capitalisation (CAP) table is an organized list of all stakeholders and their respective stakes in the company. It includes the founders, investors, directors, and employees who own shares and voting rights. The Cap table also provides a transparent picture of who owns how much by including share prices.

In addition, the Cap table breaks down the structure of share capital into equity, preferential shares, warrants, convertible debt, and more. An accurate Cap table is essential in fundraising strategies and other financial decisions like IPOs and M&As. It is also the most effective tool for analysis by VCs and tax compliance.

In a Start-up 101 series video, our mentor Sharda Balaji, who is primarily a lawyer and CS, and founder of law firm NovoJuris, walks us through the details of the Cap table and explains how it affects business decisions. With her experience as a legal counsel, founder, angel investor, independent director, and trustee, she provides valuable insights into the significance of Cap table for startup funding.

At Start-up 101, we have got you covered with basics in the form of FAQs answered by Founders and CEOs themselves. We have also unraveled almost everything from investing, hiring to valuation to provide A to Z solutions to these hurdles and boost the confidence of novice entrepreneurs. We believe that everyone who aspires to make a dent in the universe can benefit from our series, as sometimes the only source of knowledge is experience, and there are hundreds of people who have crossed the path you are walking now.