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A capitalisation table, or cap table, is one of the key sources of truth for your company's ownership structure. At its simplest, it should tell you who owns how many shares, what class those shares are, and what percentage in the company those shares represent.
Properly maintaining your cap table will give you and your investors a clear picture of your ownership and equity structure, making fundraising easier and helping to prevent any unwelcome surprises. Your investors will expect your cap table to be accurate and consistent with the company's register of members and Companies House filings, so it is an important thing to get right and keep on top of.
What goes into a cap table?
- At a minimum, a cap table should include the following:
- list every shareholder (ideally by their full legal name)
- the number of shares that each shareholder holds
- the class attaching to the shares (for example, ordinary or preferred)
- the percentage of shares held by each shareholder – this should be displayed on both an undiluted basis (i.e., counting only those shares which are actually issued) and a fully diluted basis (i.e., including any option pool or convertibles)
If you're planning a raise, an incoming investor would also expect that your cap table displays the "post-money" position, being the cap table as it would look assuming investment closes, reflecting any new investors and changes to your option plan. This is important so you and your incoming investors have a clear picture of how the equity and control structures in your company will look following the investment.
Building your cap table
Start with the founders: record each founder's name and shareholding so that the numbers match the incorporation or any post‑incorporation allotments.
As you start raising money, add your investors to the cap table. If you have them, record your option pool, making sure to distinguish between those options which have been allocated to employees and those which haven't.
It's also a good idea to note any convertibles that the company might have issued, whether those are SAFEs, advance subscription agreements or convertible loans. Ideally, for each instrument, you would set out the amount advanced under that instrument, any valuation cap or discount that might apply upon conversion, and the longstop (or maturity) date for conversion of the instrument (if any).
Keep it aligned with your legal records
Founders can often forget that, alongside your cap table, every company needs to maintain a register of members. Unlike a cap table, a register of members is a legally required document that must contain certain information about your company's shareholders.
If your cap table and your register of members don't line up, an incoming investor's due diligence may flag it up as an issue to rectify before they invest, and founders can risk losing precious time fixing historic issues.
After each share issue, share transfer, change to your option pool or any other change to your share capital structure, be sure to update the cap table straight away and keep one "current version" clearly labelled.
Common snags and how to dodge them
- Failing to update the cap table regularly and misallocating equity confuses investors. Avoid this by exercising meticulous record keeping and, if in doubt, consulting legal and financial advisers.
- Nicknames, advisory holding companies, and missing addresses slow signing and can misname the legal owner in documents; use full legal names and contact details.
- "Roughly right" percentages hide errors in the total issued shares; reconcile the denominator regularly against allotments and transfers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
