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.
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