A cap table, short for capitalisation table, is a list of everyone who owns shares in a company or has a right to them, showing how many each holds and what percentage of the company that is. It covers founders, investors and staff, and it also shows shares that don’t exist yet but could be issued, such as share options and investments that convert into shares later.
Investors read the cap table before they invest, to see exactly what they’re buying a share of, and their lawyers check it against the company’s records in due diligence. Gaps between the two don’t usually kill a deal on their own, but they slow it down while the paperwork is found or fixed.
I’ve raised £250m+ for my own companies and invested in 100+ businesses, so I’ve read cap tables as the founder raising and as the investor checking them.
What a Cap Table Shows
A cap table has one row for each shareholder or group of holders, and columns for the shares they hold, the class of those shares and their percentage of the company. A simple cap table example, for a company with 2 founders, a group of angel investors, a staff option pool and one advance subscription agreement waiting to convert, looks like this.
| Holder | Share class | Issued shares | Options and conversion rights | Fully diluted shares | % of issued shares | % fully diluted |
|---|---|---|---|---|---|---|
| Founder A | Ordinary | 5,000,000 | 5,000,000 | 55.6% | 47.6% | |
| Founder B | Ordinary | 3,000,000 | 3,000,000 | 33.3% | 28.6% | |
| Angel investors | Ordinary | 1,000,000 | 1,000,000 | 11.1% | 9.5% | |
| Staff options granted | Options over ordinary | 400,000 | 400,000 | 3.8% | ||
| Unallocated option pool | Options over ordinary | 600,000 | 600,000 | 5.7% | ||
| Advance subscription agreement | Converts to ordinary | 500,000 | 500,000 | 4.8% | ||
| Total | 9,000,000 | 1,500,000 | 10,500,000 | 100% | 100% |
The advance subscription agreement is an estimate. It’s £150,000 that turns into shares at the next priced round, and at a price of 30p a share it would convert into 500,000 shares. The real number depends on the price that round sets.
A fuller cap table also records the price paid for each issue, the nominal value of the shares, the vesting terms on founder and staff shares, and the valuation cap or discount on anything that converts.
The cap table isn’t the legal record of who owns the company. In the UK that’s the register of members, which every company has to keep under section 113 of the Companies Act 2006, showing each member’s name, the shares they hold by class and the amount paid on them. A person who agrees to take shares becomes a member when their name goes on the register.
“Every other person who agrees to become a member of a company, and whose name is entered in its register of members, is a member of the company.”
Companies Act 2006, section 112(2)
In the US, a Delaware corporation records the same information in its stock ledger, which is the only evidence of who its stockholders are. The cap table summarises that record, adds the percentages and adds the shares still to be issued.
How to Build a Cap Table
A cap table is built from the company’s documents, in date order, so every number on it can be traced to the paper that created it.
- Start with incorporation. The shares issued to the first shareholders, known as subscriber shares, are in the incorporation documents. That’s the first row of every cap table.
- Add every share issue since. For each one, record the date, who received the shares, the class, the number, the nominal value and the price paid. In the UK, a company limited by shares has to send Companies House a return of allotment, form SH01, within 1 month of issuing shares, with a statement of capital showing the total shares of each class. Those returns are the easiest check that the list is complete.
- Add every transfer. When an existing shareholder sells or gives shares to someone else, nothing new is issued, but the holder changes. Record the date, the seller, the buyer and the number of shares, and check the transfer has been entered in the register of members.
- Record the share classes and their rights. The articles of association set out what each class carries: votes, dividends and what it receives if the company is sold. Preference shares held by an investor sit on a separate line from the founders’ ordinary shares.
- Add options and the option pool. Record every option granted, with the holder, the number of shares, the exercise price and the vesting schedule, and the shares still unallocated in the pool. For UK companies using Enterprise Management Incentives, HMRC needs to be told about each option granted on or after 6 April 2024 by 6 July after the end of the tax year in which it was granted, or the tax advantages can be lost.
- Add anything that converts into shares. SAFEs, advance subscription agreements, convertible loan notes and warrants all go on, with the amount, the valuation cap, the discount and an estimate of the shares each would convert into.
- Calculate the percentages. Work out each holder’s share of the issued shares and of the fully diluted total, then check the issued total matches the latest statement of capital at Companies House.
- Keep it current. Every share issue, transfer, option grant and conversion changes the table, so it’s updated each time one happens, with the supporting document filed alongside it in the company’s data room.
Cap Table Template
The free cap table template is an Excel file that works in Google Sheets and Numbers too. It’s free to download with no sign-up, and it comes filled in with the example cap table above so the formulas can be seen working before the founder puts in their own numbers.
It has 3 sheets:
- Cap table. One row per holder, with the share class, issued shares, options and conversion rights, and the percentages on an issued and a fully diluted basis, calculated for you.
- Share log. Every share issue and transfer in date order, with columns for the price paid, the board or shareholder resolution, the SH01 filing date, the share certificate and the date the register of members was updated.
- Round model. A pre-money valuation and an investment amount, giving the price per share on a fully diluted basis, the new shares issued and the investor’s percentage after the round.
Issued vs Fully Diluted Shares
Issued shares are the shares that exist today and appear on the register of members. Fully diluted shares are the issued shares plus every share the company has committed to issue in future: options already granted, whether vested or not, the unallocated option pool, warrants and anything that converts into shares.
In the example, the company has 9,000,000 issued shares and 10,500,000 on a fully diluted basis. Founder A owns 55.6% of the issued shares but 47.6% of the company on a fully diluted basis, because the options, the pool and the advance subscription agreement would all add shares if they were turned into shares.
Fully diluted shares = issued shares + options granted + unallocated option pool + warrants + shares from conversions
Holder’s fully diluted percentage = holder’s shares and options ÷ fully diluted shares
Price per share in a round = pre-money valuation ÷ fully diluted shares
Investors usually price a round on the fully diluted share count. The price per share is the pre-money valuation, which is what the company is agreed to be worth before the money goes in, divided by the fully diluted shares. That means the existing options and convertibles come out of the current holders, not the new investor.
| Example round: £1.5m at a £6m pre-money valuation | Priced on fully diluted shares | Priced on issued shares |
|---|---|---|
| Shares used for the price | 10,500,000 | 9,000,000 |
| Price per share | 57p | 67p |
| New shares issued to the investor | 2,625,000 | 2,250,000 |
| Investor’s share of the fully diluted company after the round | 20% | 17.6% |
The investor agreed to put £1.5m into a company worth £6m, so they expect 20% of the company once the money is in: £1.5m divided by the £7.5m post-money valuation. Pricing on the fully diluted count gives them that. Pricing on issued shares alone would leave them with 17.6% once the options and the advance subscription agreement turned into shares, which is why a term sheet usually says the price is set on a fully diluted basis.
How the option pool fits into this, and the trap in it, is set out in pre-money vs post-money valuation, and how the founder sets the valuation in the first place is covered in startup valuation.
Cap Table Mistakes That Stall Due Diligence
In due diligence, an investor’s lawyers ask for the documents behind each line of the cap table and check them against the register of members and the Companies House filings. These are the gaps that hold a round up while they’re sorted out.
The cap table doesn’t match the register. A share issue on the spreadsheet with no entry in the register of members, or a statement of capital at Companies House that shows a different total, has to be reconciled before completion. Sometimes that means filing a late return or correcting the register.
Shares were promised but never issued. Shares agreed with an early employee, adviser or co-founder in a conversation or an email, with no board approval and no share issue, leave the investor unsure who owns what. Before the round closes, the founder has to either issue them properly or agree in writing that they won’t be.
The paperwork for an issue is missing. Each issue needs the board or shareholder resolutions that approved it, the SH01 return, and share certificates, which a UK company has to have ready within 2 months of issuing the shares. Without them the lawyers can’t confirm the shares were validly issued.
Transfers weren’t completed. A transfer needs a signed stock transfer form, any stamp duty paid to HMRC within 30 days of signing, and an entry in the register of members. A transfer that stopped partway leaves the shares legally with the original holder.
Options were granted outside a proper plan. Options agreed by email, granted over more shares than the pool holds, or not notified to HMRC under an EMI scheme by the deadline raise questions about whether they’re valid and whether staff keep the tax advantages.
Convertibles were left off. A SAFE, advance subscription agreement or convertible loan note missing from the cap table makes the fully diluted total too low, so every percentage on it is wrong, including the investor’s own percentage after the round.
A shareholder left with no leaver terms. A co-founder who has left the business and still holds shares is a question of what the articles and the shareholders’ agreement say. If they include good and bad leaver terms or vesting, the shares can be dealt with under them. If they don’t, the founder needs to agree a buyback or a transfer with that shareholder before the investor will commit.
Share classes and rights aren’t clear. Shares described on the cap table as one class but issued as another, or classes whose rights aren’t written into the articles, mean the investor can’t tell who gets paid what on a sale.
Each round adds new shares and holders, and each one changes the percentages for everyone already there, which is worked through round by round in equity dilution.
Cap Table Software vs a Spreadsheet
A spreadsheet is enough for a company with a few shareholders and no options or convertibles. It costs nothing, the founder controls it, and an investor can open it without a login. Its weakness is that it only holds what someone types into it, so it drifts from the register of members unless it’s updated every time something changes.
Cap table software such as Carta, Ledgy and Vestd keeps the cap table, the share register, option grants and vesting in one place, and some produce the filings and certificates as shares are issued. It earns its subscription once the company has an option scheme, several rounds of investors or several share classes, because it handles the vesting and conversion arithmetic and gives investors their own view of their holdings.
FAQs
What is a cap table?
A cap table is a list of everyone who owns shares in a company or has a right to them, with how many each holds and their percentage of the company. It includes issued shares, options and anything that will convert into shares later.
What does fully diluted mean on a cap table?
Fully diluted means counting every share the company has issued plus every share it has committed to issue, such as options, the unallocated option pool, warrants and convertibles. A holder’s fully diluted percentage is their share of that larger total, so for a shareholder with no options it’s lower than their percentage of the issued shares alone.
Is a cap table a legal document?
No. In the UK, the legal record of who owns a company’s shares is the register of members, and in a Delaware corporation it’s the stock ledger. The cap table is a working summary of that record, and investors check that the two match.
Do you need a cap table before raising money?
Yes, if the company is raising equity. An investor needs to see who owns the company and what’s already been promised before agreeing a price, and their lawyers will check every line of it in due diligence.
How often should a cap table be updated?
Every time the company issues shares, registers a transfer, grants options or converts an investment into shares.
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This is general information on how cap tables work and isn’t legal or tax advice.
