Carta
Verified Partner

Equity. Simplified.

Carta helps private companies, public companies, and investors manage their cap tables, valuations, investments, and equity plans.

 

Carta, formerly eShares, changes how companies, investors, and employees manage equity and ownership. With Carta, cap tables stay up to date, valuations are fast and audit-ready, offering liquidity is simple, and shareholders know what they own. Over 800,000 shareholders track hundreds of billions of dollars in equity on Carta.

Cap table management
The source of truth for your company’s equity
Liquidity
Offer liquidity by running one-off transactions, tender offers, and stock buybacks
409A valuations
The leader in audit-ready, fast, cost-effective 409As

What Is a Capitalization Table?

A capitalization table, also known as a cap table, is a spreadsheet or table that shows the equity capitalization for a company. A capitalization table is most commonly utilized for startups and early-stage businesses but all types of companies can benefit from using a clear and easily accessible cap table.

 

In general, the capitalization table is an intricate breakdown of a company’s shareholders’ equity.Cap tables are widely used by entrepreneurs, venture capitalists, and investment bankers to model and to analyze events such as ownership dilution, issuing employee stock options, or issuing new securities. After several rounds of financing, a cap table can become highly complex.

 

 

Why do I need to track shareholder equity?

Your company is constantly evolving, so your capitalization table will shift. Every time you have a funding round, or issue stock options to attract talent, your cap table needs to be updated. 

When its time for valuation, your cap table will be essential for a buyer to understand exactly who gets paid out on the sale and what is left for the new owner. 

 

Sounds like a spreadsheet: Why do I need a service for this? 

As a cap table becomes more complex, the ownership percentages indicated on the cap table can diverge from actual percentage of proceeds distributed to shareholders upon a liquidity event. This is called "accounting ownership" (actual ownership percentage on the cap table) vs. "economic ownership" (percentage of proceeds available to equity).

When there is a difference between actual and economic ownership it is necessary to do a "waterfall analysis." A waterfall analysis details the exact payouts to every shareholder on a company's cap table based on a specific amount of proceeds available to equity in a particular liquidity scenario. Since a company often does not know if, when, or how it will achieve a liquidity event, waterfall analysis typically covers a range of liquidity assumptions.