Cap Tables 101
Cap(italization) tables are an often overlooked but rarely unimportant aspect of private investments. The cap table, at its simplest level, shows who owns what part of the company prior to and after a financing round.When a company is formed, it is most often owned 100% by the company founders - the cleanest cap tables appear to ever be. Over time, as employee option pools are determined, additional investors are brought in, deal terms are dictated, provisions and rights exercised, shares transferred and on and on, the cap table can get messy.
For Angel Investors, who are investing at the earliest stages of a company, a messy cap table this early on may be a red flag. Not necessarily as a reflection on the founder’s ability to manage it but because it may be a headache to work around when it comes to term sheets and deal economics and manyAngels would prefer not to deal with lots of investors (read: voices at the table).