An introduction to the fundamentals of share capitalisation tables and a range of templates.
Share cap tables are not glamorous but they are important. They can show where voting power sits within a company, who is incentivised and define who gets what at the point of exit. Despite this, for many entrepreneurs it falls down the list of priorities and is only ever dealt with once a fund raising process has begun.
In the series of slides below we have looked to cover the fundamentals of cap tables and equity maths. There are some key equations to understand and key principles to take on board.
All of the information in the presentations below are purely indicative and not based on real life examples.
An explanation of the basics is given in:
For further information on the additional key concepts (share classes, options and dilution) the below slides outline this:
If you are looking to build your own cap table from scratch this can be painful. It may be useful to take a look at our template version first.
In terms of our advice on this topic:
- Make sure that share prices are given on fully-diluted number of shares not issued
- Shares can only ever be whole numbers so avoid fractions of shares being used in calculations
- Ensure that the cap table is consistent with the share register
- Always model for the impact of specific clauses in order to understand their full importance
We hope this is useful and increases your understanding of one some of the core concepts of raising finance and the documents you will need to produce.