This post was originally produced for Forbes.
Social entrepreneurs can be parsed along a variety of different axes. One of those is whether the social entrepreneur comes primarily from a business or entrepreneurship background or an impact background without much business experience. This piece is written as a primer on capitalization tables, or cap tables, for those without much business or entrepreneurship experience.
For this piece, I’m drawing principally on my experience running an FINRA-registered boutique investment banking firm that worked primarily with small and midsize companies.
The cap table is the list of owners and their respective stakes in a business and their respective ownership stakes. Generally, entrepreneurs and investors agree that a simple cap table is a better cap table. The fewer the investors the better. When it comes time to make key decisions that require approval from shareholders, the fewer signatures required, the better.
That said, the clutter in a cap tab…