Cap Table

A cap table, short for capitalisation table, lists who owns which shares in a company. It shows all shareholders, their ownership percentages, and often also options and special rights. Especially for start-ups with several financing rounds, it is the central overview document. The key distinction is between the issued and the fully diluted view.

The fully diluted view includes potential additional shares from options and convertible instruments. How an unallocated option pool, convertible loans, SAFEs or anti-dilution rights are included depends on the agreed definition and conversion assumptions. Those assumptions must be visible so that round valuations and price calculations can be understood. A simple percentage table is not enough, because economic distribution at exit follows only from the interaction with liquidation preferences, participation rights and caps. In practice the table is therefore supplemented by a waterfall model allocating proceeds across different exit values.

In Germany, the cap table is an internal document. It replaces neither the underlying investment agreements nor a GmbH’s shareholder list filed with the commercial register. Differences need explaining: options or unconverted loans may appear in a fully diluted view without yet being issued shares. Cap tables are among the first documents requested in due diligence. Typical errors include forgotten convertible loans, undocumented option promises, unclear vesting status for departed employees and legacy stakes granted to former advisers.

For ongoing maintenance it has proven best to record every change immediately and to link the table to the underlying documents, meaning shareholder resolutions, notarial deeds, option grants and convertible loans. A table without evidence is worthless in a process, because every position must be substantiated. A scenario function is also advisable, showing in advance how a planned round would affect all ownership percentages. That calculation is the basis of every negotiation about valuation and option pool.