The Basics of Cap Tables for SPVs and Funds
Learn the definition of Cap Table and how does it work.
Table of Contents
A cap table, or capitalisation table, shows a company’s ownership structure and tracks each stakeholder’s equity. This guide covers what a cap table is, how it works, and its uses, particularly for Special Purpose Vehicles (SPVs) and funds.
What is a Cap Table?
A cap table is a document that outlines company ownership. It lists shareholders, their share types, and ownership percentages. For SPVs and funds, a cap table tracks investor ownership and equity distribution. It also includes stock options, warrants, and convertible securities, providing a comprehensive view of the company’s capital structure.
How Does a Cap Table Work?
Cap tables show ownership changes over time. They track events such as new funding or stock sales and illustrate how ownership shifts. Additionally, they demonstrate how new shares affect existing shareholders’ ownership. Cap tables are typically updated after each financing round or significant ownership change, ensuring all stakeholders accurately understand their position in the company.
Uses of a Cap Table
A cap table is used for:
- Fundraising: Investors use cap tables to see ownership distribution and share rights.
- Equity Management: Cap tables record investor and employee equity, ensuring that ownership records remain accurate.
- Exit Planning: During mergers or public offerings, cap tables show how proceeds are split.
- Decision Making: Cap tables show voting rights based on share types, aiding governance.
- Valuation: Cap tables help determine the company’s value and individual share prices during funding rounds.
For SPVs, cap tables are crucial for managing multiple investors’ stakes in a single investment, tracking distributions, and ensuring compliance with regulatory requirements. Startups often use SPVs to streamline their fundraising efforts and maintain a clear, organised cap table.
Frequently Asked Questions:
Why do SPVs need a cap table?
A cap table provides a clear record of ownership, helping SPVs manage investor equity.
What do investors look for in a cap table?
Investors check how ownership is distributed, potential dilution, and the rights associated with different shares to assess their investment risks and returns.
Simplify Cap Table and SPV Management
Managing cap tables and SPVs doesn’t have to be complicated. At Auptimate, we streamline everything from compliance and reporting to equity management, ensuring your cap table stays accurate and up to date. Focus on growing your investments while we handle the rest.
