A standard capitalization table, often referred to as a cap table, is a document that outlines the equity ownership of a company. Here’s a general breakdown:
– Founders: Typically hold a significant portion of the equity, often ranging from 20% to 60%, depending on the number of founders and the stage of the company.
– Family and Friends: Early investors such as family and friends may hold anywhere from 5% to 20%, reflecting their early support and the high risk they took.
– Investors:
– Angel Investors: May acquire 10% to 30% of equity, usually in exchange for their early-stage investment.
– Venture Capitalists: In later funding rounds, VCs might take a larger share, potentially 20% to 50%, which includes preferred stock with specific rights like liquidation preferences.
– Employees:
– Employee Stock Options Pool (ESOP): Generally, 10% to 20% is reserved for current and future employees as part of an incentive program.
– Individual Employees: The percentage for individual employees can vary widely, with key early employees sometimes receiving 1% or more, while later hires might receive stock options representing less than 0.1% of the company.
The types of stock typically listed in a cap table include:
– Common Stock: Usually held by founders, employees, and sometimes friends and family. It represents ownership but often comes with fewer rights than preferred stock.
– Preferred Stock: Often issued to investors and comes with additional rights, such as priority on dividends and liquidation.
– Options/Warrants: These are rights to purchase stock at a predetermined price and are often used to incentivize employees.
The cap table should be designed in a simple and organized layout that clearly shows who owns certain shares and the number of outstanding shares. The most common structure is to list the names of investors/security owners on the Y-axis, while the type of securities is listed on the X-axis.
These percentages can vary greatly depending on the specific circumstances and negotiations of each company. It’s also important to update the cap table after each investment round or when new stock options are granted to reflect the current ownership structure accurately.