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Anatomy of the Cap Table

Updated

Introduction

This article will guide you through how to access and interpret your Cap Table on our platform.

A Capitalization Table, commonly referred to as a Cap Table, is a detailed record of all ownership in your company, across all types of securities. It shows who owns what, how much they own, and through which type of equity, such as common stock, options, or from an equity financing.

Your Cap Table includes:

  • The number of shares held by each individual or entity
  • Outstanding equity awards and/or warrants
  • Convertible instruments such as SAFEs, KISSes, and convertible notes/bridge notes.

When a company is just starting out, the Cap Table may only list the founder(s). As the company grows and issues equity to employees, investors, or advisors, the Cap Table expands to reflect those changes. This tool helps you maintain a clear and up-to-date view of your company’s ownership structure. If you are interested in learning more about the importance of a Cap Table, click here.

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How to access the Cap Table

The Cap Table can contain some of the company's most sensitive and secretive information, so not everyone will have access to this function. If you think your permissions are too limited in your company, please contact the appropriate full company access user (usually a CEO, founder, or CFO) and send along this article on how to expand access.

To view the Cap Table, navigate to the the Equity and Financing module and click on Capitalization Table.

You can download a version of the Cap Table by clicking the Excel Export button at the top of the page. The export will show multiple tabs such as summarization, capitalization, stock incentive plans, stock classes and more.

Understanding your stock classes

Your Cap Table will show how many stock classes your company has established. Most companies begin with common stock, which means they have just one class of stock. As the company grows and raises capital, it may issue additional classes, such as Series Seed, Series A, and Series B. In this case, the company would have four stock classes, one class of common stock and three classes of preferred stock.

You can find the list of stock classes at the top of your Cap Table, making it easy to see how ownership is structured across different types of equity.

Understanding your preferred stockholders, common stockholders, and options outstanding

Preferred stock is typically issued to investors and comes with the benefit of priority payout during a liquidation event. For example, if the company dissolves, preferred shareholders are repaid first, and common shareholders are repaid last, if there are remaining funds. In some cases, there may be no funds left, and common shareholders may receive nothing.

  • In your Cap Table, individuals or entities, such as venture funds, that hold preferred stock are grouped under the Preferred Holders section, listed in order of decreasing ownership percentage.
  • Those who hold only common stock are listed below, under the Common Stockholders heading.
  • Individuals with unexercised option grants appear at the bottom of the Cap Table, under Other Options Outstanding.
  • Holders of warrants are listed under Other Warrant Holders, while those with SAFEs or KISSes are grouped under Alternatives.
  • Investors with bridge notes or convertible notes are listed under Debt Holders.

If an investor owns multiple types of securities, they will appear as a single line item in the Cap Table, with a dropdown showing the breakdown of their holdings. Here's how placement works:

  • If an investor holds any preferred stock, they will be listed under Preferred Holders.
  • If a stakeholder holds both common stock and options, they will be listed under Common Stockholders.
  • If an investor holds a convertible instrument or warrant in addition to stock or options, they will be placed in the section corresponding to their stock type, either Preferred or Common, as applicable.

Going through each line item

Each line item in your Cap Table displays the name of the person or entity that owns the shares. For individuals, this should be their full legal name, as it will appear on the stock certificate. You can view this by selecting the line item in the Cap Table or through the Stock Ledger.

Each entry also includes the number of shares or options held, or the amount of money contributed for instruments like SAFEs, KISSes, or convertible notes.

The Cap Table also indicates whether shares or options were granted under an equity plan or outside of it. Supporting documents linked to each line item provide details about how the equity was granted, which may include financing rounds, bridge note conversions, warrant purchases, and more.

It’s important to include all shares or options granted to a person in the Cap Table, even if they haven’t vested yet. This is because the individual may remain with the company and earn the right to keep those shares or exercise their options, so they should be factored into ownership calculations.

An example of line-item entry is shown below, which illustrates how to see the number and class of shares owned by each holder. You can also see that our platform allows for editing directly from the Cap Table, via the Edit icon.

Understanding the Percent column

In the Cap Table, each line item displays the ownership of shares, options, or alternatives/debt for each holder. The Percent column calculates the percent ownership for each of these stockholders based on the number of shares issued for each class of stock. For instance, using the screenshot below, the Andrew O'Brien Family Trust owns 55.454% of the Series B shares. In other words, they own 57,026 shares of Series B shares, when divided by the total number of shares issued by the company (102,835), yields a 55.454% ownership of Series B stock. 

Understanding CSE

The Cap Table will list each class of stock as well as the CSE ownership for each holder. CSE is the Common Stock Equivalent, and it is a calculation used for preferred stock classes where the terms of the stock class may state that one share of preferred stock will convert into common stock at a specified ratio. If the conversion ratio is one to one, the CSE will be the same as the number of issued shares. In the example below, the Series A-1 Preferred has a 2:1 conversion ratio which is applied in the CSE column. 

Understanding Fully Diluted

When reviewing your Cap Table, you'll notice a column labeled Fully Diluted on the far right, as well as a corresponding entry in the Totals row at the bottom. This column represents the total number of shares for each stock class, including all issued and outstanding securities.

In simple terms, fully diluted means the complete count of shares that could exist if all possible sources of equity, such as warrants, options and shares reserved under Stock Incentive Plans (SIPs), were issued. 

Fully diluted includes:

  • All granted shares (Common Stock Equivalents or CSEs) All options available for future issuance 
  • All shares reserved in any SIPs

However, fully diluted does not include:

  • Authorized but unissued shares 
  • Unconverted SAFEs or bridge notes

Modifying your Cap Table view

Sometimes, you may want to view your Cap Table totals and ownership percentages in different formats. To support this, we offer flexible modeling options that can be accessed through the Capitalization Table Options menu.

You can choose to display your Cap Table in several ways:

  • A Fully Detailed Capitalization Table or an Ownership Summary
  • Include specific data such as:
    • All Outstanding Shares
    • Granted Options and Warrants
    • Ungranted Plan Shares
    • Grants Pending Approval
    • Unfulfilled Promised Grants
  • Highlight missing or deferred documents for easier tracking

You can generate a Cap Table as of a specific date. By default, the table will reflect the current date, but you can select any date that suits your needs.

Additionally, the Excel export allows you to group holdings by investor, in case several different investment vehicles have stakes in your company.

How does the Cap Table round for partial shares?

It's not possible for people to own partial or fractional shares; you either own the share or you don't. For example, you cannot grant someone 45.5 shares, you can grant them 45 or 46 shares. However, it's possible for a fractional share to vest even though the holder is granted a whole share. The vesting is rounded according to the example illustrated below:

If a holder has 100 shares that vest 3 year annually, instead of 33.333 shares vesting per year, the platform will round accordingly:  

First vesting period: 33 shares
Second vesting period: 33 shares
Third vesting period: 34 shares

Essentially, the platform will round down until the fractional amounts aggregate above a whole number, at which point it is added to the vesting period. 

Screenshots are for illustrative purposes only.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

Fidelity Private Shares LLC provides cap table management and other administrative services to private companies and their equity compensation plans.

Fidelity Private Shares LLC

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