Capitalisation Table

What is the Capitalisation Table Template?

The Capitalisation Table (Cap Table) Template is a structured document that helps businesses, especially startups, outline their ownership structure. It records the equity distribution among shareholders, including founders, employees, and investors, and details the types of securities they hold. This template tracks equity allocation, allowing companies to manage ownership stakes effectively, particularly after funding rounds or issuing new shares. The Cap Table serves as a valuable tool for financial planning, decision-making, and attracting investors by offering a clear overview of the company’s ownership dynamics.

How does the Capitalisation Table Template help?

The template offers an organised framework to keep track of a company’s equity structure, ensuring transparency and informed decision-making. It provides key insights in several important areas:

1. Founder Incentivisation

The template highlights the stakes held by founders, which plays a key role in keeping them motivated. A well-maintained cap table allows investors to assess whether the founders’ ownership stake is significant enough to align their financial incentives with the company's long-term success.

2. Managing Future Dilution

By showing any instruments like convertible debt or SAFEs that may lead to dilution, the template helps businesses and investors understand how equity stakes may change in future funding rounds. This allows stakeholders to plan for the potential impact on ownership.

3. Talent Attraction and Retention

The cap table reflects the size of the employee option pool, which is critical for attracting and retaining top talent. The template helps businesses allocate share options effectively, ensuring that they have the resources to reward employees with equity incentives that align with the company’s growth trajectory.

4. Understanding the Investor Landscape

The template provides a detailed view of the company’s current investors and their ownership stakes. This information helps new investors assess who they would be joining and whether they can expect aligned or divergent interests during future negotiations.

5. Supporting Investment Decision-Making

Pro-forma cap tables enable investors to make informed decisions about their potential investment amount. By utilising the startup's current valuation and estimating a future "exit value," investors can calculate the potential return on investment (ROI) and align it with their internal investment benchmarks.

How to use this template in your workflow

1. Shareholder Position Section

Begin by filling in the positions of shareholders, such as founders, employees, and investors. This section provides clarity on who holds what role within the company and their level of influence. Clearly identifying these positions is essential for both internal planning and external investor relations.

2. Common Shares Section

Track the common shares held by different shareholders. These are typically issued to founders and employees and include voting rights. The formula provided in the template ensures you can easily calculate the total number of common shares after considering other share types.

3. Preferred Shares Section

In this section, document the preferred shares held by investors. Preferred shares often come with specific rights, such as liquidation preferences or anti-dilution provisions. This section helps companies manage investor expectations and rights while ensuring that different classes of shares are clearly separated.

4. Options to Common Shares Section

This section is designed to track share options, typically used to incentivize employees. Enter the number of options issued to employees or other stakeholders, ensuring that the overall cap table reflects potential future equity stakes accurately. Options are an important tool for talent retention, and this template helps businesses monitor their impact on overall ownership.

5. Total Shares and Fully Diluted Section

Use this section to calculate the total number of shares (common + preferred) and the fully diluted total, which includes all potential shares from options or other convertible securities. This provides a comprehensive view of ownership, helping companies and investors understand the full picture of equity distribution.

6. % of Ownership Section

Track the percentage of ownership for each shareholder based on their current shares outstanding. This section shows the relative ownership stakes and influence of each party, helping stakeholders understand their position within the company.

7. % of Ownership Fully Diluted Section

This section helps to project the ownership percentage in a fully diluted scenario, taking into account all potential shares, including options. This ensures transparency around the impact of dilution and provides investors with a realistic view of their future ownership stakes.