Startup Funding Espresso -- Reading Cap Tables

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The cap table stands for capitalization table and tracks the equity ownership in a company.

It’s important to be able to read a cap table and understand what it says.

The key terms to know include the following:

• Pre-money -- the value of the shares before the investment.
• Post-money -- the value of the shares after the investment.
• Price per share -- the post-money valuation divided by the total number of shares.
• Common stock -- basic ownership share in a company.
• Preferred stock -- a stock with special rights and privileges.
• Convertible preferred stock -- preferred stock that can convert to common stock.
• Participating preferred -- preferred stock with a liquidation preference.
• Stock options -- the right to buy a specific number of shares at a specified price.
• Warrants -- the right to buy stock at a specific price.
• Restricted stock -- stock used instead of options for tax purposes.
• Authorized shares -- total number of shares the company has authorized for present and future use.
• Outstanding shares -- total number of shares that have been issued.
• Fully diluted shares -- total number of shares including all warrants, options, and restricted stock exercised.

It’s important to know these terms so you understand what the ownership stake means.


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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