Whitepaper
Ownership
Methodology
How the cap table tool models ownership, dilution, and governance for Artist Corporations — and why these structures matter for creative people.
Executive Summary
The Ownership & Cap Table tool lets artists model who owns what in their A-Corp. It tracks shareholders, share classes, funding rounds, dilution, vesting, and voting power — the same machinery that tech startups use on platforms like Carta, but adapted for creative practices.
Most artists have never encountered a cap table. That's the point. The A-Corp makes ownership structure accessible and transparent, so artists can make informed decisions about equity, investment, and governance from day one.
Why Ownership Matters for Artists
In the traditional creative industries, the question of ownership is almost always answered the same way: someone else owns the valuable thing. The label owns the master recordings. The publisher owns the rights. The gallery takes a percentage in perpetuity. The production company owns the IP.
The A-Corp flips this. Artists own the entity. They issue shares. They control the cap table. They decide who gets equity, on what terms, and with what rights. This is how every tech company operates — the A-Corp brings it to creative work.
The ownership tool exists to make this concrete: to show artists what a capitalization table looks like, how dilution works, and how to structure ownership so that creative control stays with the people making the art.
Share Structure
The tool models an A-Corp as having authorized shares (the total pool the company can issue) and issued shares (shares actually allocated to people). The difference is the unissued pool — reserved for future hires, advisors, or investors.
Default Setup
Authorized shares: 10,000,000
Founder allocation: 5,100,000 (51% of authorized)
Par value: $0.001 per share
Unissued pool: 4,900,000 (49% reserved)
Assumption: 10 million authorized shares is standard for early-stage companies. It provides enough granularity to allocate small percentages (an advisor getting 0.1% = 10,000 shares) while keeping numbers manageable. The 51% default founder allocation satisfies the A-Corp artist majority requirement from the start.
Share Classes
The tool supports four share classes, reflecting the different roles people play in a creative business:
Founder
For the founding artist(s). Typically has voting rights, longest vesting schedules, and the lowest price per share. In an A-Corp, founders are almost always artist-members.
Common
For team members, collaborators, and employees. Standard shares with voting rights. This is how you bring a manager, producer, or creative partner into the ownership structure.
Preferred
For investors. Preferred shares can carry economic preferences (getting paid back first) without voting rights — a key A-Corp feature that separates economic and creative control.
Advisor
For mentors, advisors, and strategic partners. Typically a small allocation (0.1-1%) with or without voting rights, recognizing someone's guidance without giving them control.
Assumption: These four classes cover the vast majority of creative business scenarios. The A-Corp law would likely define additional nuances around liquidation preferences and conversion rights, but for modeling purposes these categories are sufficient.
Ownership vs. Voting Power
A critical innovation of the A-Corp is the separation of economic rights and governance rights. The tool tracks both independently:
Ownership %
Formula
Shareholder's Shares ÷ Total Issued Shares × 100
Determines economic interest: share of profits, distributions, and value on exit. All shares count equally regardless of class.
Voting Power %
Formula
Shareholder's Voting Shares ÷ Total Voting Shares × 100
Determines governance power: who controls creative decisions, hires, and strategy. Only shares with voting rights count.
This separation is what makes the A-Corp powerful for creative work. An investor can own 30% of the company (economic interest) but have 0% voting power — meaning they share in the financial upside without being able to override creative decisions.
The tool enforces the 51% artist voting threshold: it calculates artist voting power separately from artist ownership, and warns when artist-members' voting power drops below 51%. This is the non-negotiable core of A-Corp governance.
Valuation Model
The tool calculates an implied valuation based on the most recent share price:
Valuation Formula
Implied Valuation = Price Per Share × Total Issued Shares
If no funding rounds: Par Value × Total Issued Shares
After funding rounds: Most Recent Round's Price Per Share × Total Issued Shares
At founding, with default values (5.1M shares at $0.001 par), the implied valuation is $5,100. This is nominal — it represents the legal minimum value of the shares, not their economic value. Once a funding round establishes a real price per share, the valuation updates accordingly.
Assumption: We use the most recent round's price per share as the best indicator of current value. In reality, different share classes may have different values (preferred shares often have liquidation preferences). The tool simplifies this by applying a single price per share across all classes for valuation purposes.
Dilution Modeling
When an A-Corp raises money, new shares are issued to investors. This dilutes existing shareholders — their percentage ownership decreases even though their number of shares stays the same.
The tool models this in real time. For each funding round, it calculates:
Post-Round Ownership
Shareholder's Shares ÷ (Previous Total + New Shares) × 100
Post-Money Valuation
Round Price Per Share × Total Shares After Round
Dilution Chart
Stacked area chart showing each holder's ownership % through each round
The dilution timeline is critical for A-Corp compliance. As rounds progress, the tool tracks whether artist ownership stays above 51%. If a proposed round would push artist ownership below the threshold, artists can see this before it happens and structure the deal to maintain compliance.
Example: Seed Round Dilution
Before: Founder holds 5,100,000 of 5,100,000 shares = 100%
Seed round: Investor buys 1,000,000 new shares
After: Founder holds 5,100,000 of 6,100,000 shares = 83.6%
Artist ownership: still above 51% ✓
Assumption: The tool models simple dilution (new shares issued). It does not model anti-dilution protections, convertible notes, SAFEs, or other complex instruments. These would be important in real funding scenarios but are beyond the scope of this modeling tool.
Vesting Schedules
Vesting determines when shares actually become “owned” by a shareholder. It's a protection mechanism: if someone leaves early, unvested shares return to the company pool. The tool tracks two parameters per shareholder:
Vesting Period
Total months over which shares vest. Default: 48 months (4 years) for founders. Shares vest linearly — 1/48th each month.
Cliff Period
Months before any vesting begins. Default: 12 months (1 year) for founders. If someone leaves before the cliff, they get nothing.
The 4-year vesting with a 1-year cliff is the industry standard across tech and startups. We use the same default for A-Corps because it aligns incentives: it rewards long-term commitment while protecting the company if someone departs early.
For creative contexts, vesting can also align with project timelines. A band releasing an album might vest shares over 2 years (recording + touring cycle). A film production might vest over the production timeline. The tool lets users customize these to match their creative reality.
Assumption: Vesting is tracked but not enforced in the tool — it doesn't model time progression or calculate vested vs. unvested shares dynamically. It records the vesting terms for each shareholder as reference for the legal structure.
The 51% Rule
The defining feature of the A-Corp is that artist-members must hold at least 51% of voting power at all times. The ownership tool enforces this through real-time monitoring:
A-Corp Compliant
Shown when artist-tagged shareholders collectively hold ≥51% of voting shares.
Below A-Corp Threshold
Warning shown when artist voting power drops below 51%. The tool displays both the ownership % and voting % so users can identify and fix the issue.
The tool distinguishes between ownership and voting because this is how the 51% rule actually works. An investor could own 40% of the company but have 0% voting power (if their preferred shares don't carry votes). The A-Corp doesn't require 51% economic ownership by artists — it requires 51% voting power.
This is what makes the A-Corp compatible with outside investment. Artists can raise capital, share economic upside with investors, and still maintain full creative control.
Known Limitations
- No liquidation preferences. Preferred shares in real funding rounds often carry liquidation preferences (getting paid back first in an exit). The tool treats all shares equally for valuation purposes.
- No convertible instruments. SAFEs, convertible notes, and other common early-stage instruments are not modeled. These convert to equity at a future round and affect dilution in complex ways.
- Static vesting. The tool records vesting terms but doesn't calculate how many shares have vested at any given point in time.
- Single price per share for valuation. In reality, different share classes may have different effective values. Preferred shares with liquidation preferences are worth more than common shares in a downside scenario.
- No 409A modeling. The fair market value of common stock (important for tax purposes when granting options) is not calculated.
- No option pool modeling. While unissued shares serve as a de facto option pool, the tool doesn't model stock option grants, exercise prices, or option vesting separately from share grants.
A New Default
Cap tables have historically been the domain of Silicon Valley. They're how tech founders build wealth — by owning equity in a growing entity. Artists have never had access to this machinery.
The A-Corp ownership tool is a first step toward changing that. It's not a legal document and it's not financial advice. It's a thinking tool — a way for artists to see what ownership looks like, how it works, and what it could mean for their creative practice.
When artists can see their cap table, they can negotiate better. They can bring in collaborators fairly. They can raise money without losing control. That's the future the A-Corp makes possible.
Model Your Cap Table
See what ownership looks like for your creative practice.