What is a cap table and who uses it?

What is a cap table and who uses it?

• A. A cap table tracks ownership, equity shares, and option pools; used by founders, investors, and analysts.
• B. A cap table tracks only cash balances.
• C. A cap table is a document for tax filings.
• D. A cap table lists product lines.

Answer: (A)

Cap tables document ownership in a company, listing who owns how many shares, including common shares, preferred shares, and the option pool set aside for future employees. They show how equity is distributed among founders, investors, and employees, and how those ownership percentages change as new funding rounds or option grants occur. The option pool is the reserved set of shares available for future hires and grants, and the cap table tracks how that pool affects ownership and dilution over time. This tool is essential for founders planning equity splits, investors evaluating potential stakes and dilution scenarios, and analysts assessing the company’s capital structure and ownership dynamics. It also helps model future scenarios like fundraising or employees exercising options. Cap tables aren’t about cash balances, tax filings, or product lines, which is why those concepts sit outside this document.

Cap tables document ownership in a company, listing who owns how many shares, including common shares, preferred shares, and the option pool set aside for future employees. They show how equity is distributed among founders, investors, and employees, and how those ownership percentages change as new funding rounds or option grants occur. The option pool is the reserved set of shares available for future hires and grants, and the cap table tracks how that pool affects ownership and dilution over time. This tool is essential for founders planning equity splits, investors evaluating potential stakes and dilution scenarios, and analysts assessing the company’s capital structure and ownership dynamics. It also helps model future scenarios like fundraising or employees exercising options. Cap tables aren’t about cash balances, tax filings, or product lines, which is why those concepts sit outside this document.