A Cap Table, or Capitalization Table, plays a crucial role in investor negotiations. It provides a snapshot of a company's equity capitalization and ownership stakes, including the percentage of ownership, equity dilution, and value of equity in each round of investment by founders, investors, and other owners. This information is vital during investor negotiations as it helps determine the value of a company and how much stake an investor would get in exchange for their investment.
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Why do some companies, such as Airbnb, Facebook, and SpaceX, remain under the control of their founders, while others transition into the hands of their investors? Take Tesla, for instance: the original founders were Martin Eberhard and Marc Tarpenning. After three years of developing a prototype from 2001 to 2004, they met Elon Musk, an early investor who now controls and serves as the CEO. How and why do these shifts in control happen? What determines who ultimately controls a company?