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Cap tables (short for: capitalization tables) are schedules which set out the investors in a company
A cap table will show:
- Who's invested
- How much they've invested in each round
- The price paid
- How many shares they have
- Their Fully Diluted position
Here's an example of a very simple cap table, constructed from a popular blog post by Fred Wilson on the subject:
To prepare a cap table, you'll need a full picture of everyone who's invested, how much stock they own and what they paid for it. This will allow you to set out their shareholding, and calculate their percentage ownership.
Fully Diluted Cap Tables
A Fully Diluted cap table will show the percentage ownership of a company assuming all convertible instruments convert into equity. To get this calculation correct, you need to consider:
- the effect of one converting instrument on another
- the order of conversion
- the price at which the instrument is converting
These mechanics, and much more, are all covered in our Reportally Cap Table University guides (see the bottom of this page) and glossary of cap table and corporate finance terms. To help demystify any questions you may have about cap tables and the terms used. So you can create your own fully diluted cap table:
(Or you can get started now on Reportally's Cap Table builder)
Round Structuring within a Cap Table
A good cap table will often show many more parts of the equity structure of the Company, as well as its development over time. For example:
- Financial instruments: which may convert and/or dilute equity, and the applicable terms of conversion
- Option schemes and pools: including strike price and vesting terms
- Convertible debt: including the terms on which it converts, such as Conversion Discount and Valuation Cap
- Cash out rounds: where a shareholder has sold down some of their position
- Warrants and much more...
Returns within a Cap Table
The better cap tables will show the returns (or value) attributable to each shareholder, investor and/or round. This may be calculated using the current value, the value of the last fundraising round, or a possibly a projected value in the future.
These calculations can be incredibly complex, particularly if there are multiple convertible instruments and option rounds with vesting schedules. This is because they are iterative calculations, and are not well suited to traditional spreadsheet modelling software such as MS Excel
Reportally's cap table builder has 99% of all possible permutations catered for, in our Cap Table algorithm. All you need to do is fill in a few boxes, and you're set. Making it easy to run scenarios and test different structures. All at the click of a few buttons:
Further Reading: Liquidation Charts from Cap Tables
Liquidation Charts show the outcomes to each investor, or investment round, and at all possible valuations within a given range. These are best shown graphically in liquidation curves, although can be very complicated to construct, as they need to consider all possible outcome valuations.
As standard, this is all included in Reportally's cap table system: