Building a Cap Table

Series B investors will put in $5M on a $20M post-money valuation.

Existing founders & management have 15M shares; Series A Investors have 10M shares.

What will the full cap table look like after the investment?

Process Steps
1 Set up table, including all players.
2 Enter known information.
3a Calculate ownership percentage for new investors.
3b Allocate pre-money value.
4 Calculate price per share.
5 Calculate number of shares for new investors.
6 Add up the total number of shares.
7 Calculate ownership percentages.

Building a full cap table from a limited amount of information can seem daunting.

But the process of building a cap table is very similar to solving a Su Doku puzzle.

You have a grid of data points (numbers) to fill in, and you are given a few numbers to start with.

From the information you have, think about what data point(s) you can fill in next.

Continue, filling in one box at a time until all boxes are full.

Use a consistent layout for all cap tables. We recommend the following:

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
Series A Investors
Series B Investors
Series C Investors
Total
List all players down the left-hand side.

If analysis will cover multiple rounds, list players for all rounds on all tables.
Four columns of data points to be filled out:

From the question prompt, fill out the following data points:

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
Series A Investors
Series B Investors
Series C Investors
Total

From the question prompt, fill out the following data points:

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
Series A Investors
10,000,000
Series B Investors
$5,000,000
Series C Investors
Total
100.0%
$20,000,000
Given
Given
Given
Given
By definition, ownership must add up to 100%.

At this point, you can fill in two different sections of the table:

a) Use investment divided by post-money valuation to solve for percentage of ownership for new investors.

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
Series A Investors
10,000,000
Series B Investors
$5,000,000
Series C Investors
Total
100.0%
$20,000,000

At this point, you can fill in two different sections of the table:

a) Use investment divided by post-money valuation to solve for percentage of ownership for new investors.

Investing $5M at a $20M post-money valuation would give new investors 25% of the company ($5M/$20M)

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
Series A Investors
10,000,000
Series B Investors
25.0%
$5,000,000
Series C Investors
Total
100.0%
$20,000,000
$5M ÷ $20M = 25%

At this point, you can fill in two different sections of the table:

a) Use investment divided by post-money valuation to solve for percentage of ownership for new investors.

Investing $5M at a $20M post-money valuation would give new investors 25% of the company ($5M/$20M).

b) Use the original share counts (Founders & Mgmt and Series A) to allocate pre-money valuation.

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
Series A Investors
10,000,000
Series B Investors
25.0%
$5,000,000
Series C Investors
Total
100.0%
$20,000,000
Pre-money value (sum of all amounts before current investment round)
Amount invested in current round
Post-money value

At this point, you can fill in two different sections of the table:

a) Use investment divided by post-money valuation to solve for percentage of ownership for new investors.

Investing $5M at a $20M post-money valuation would give new investors 25% of the company ($5M/$20M).

b) Use the original share counts (Founders & Mgmt and Series A) to allocate pre-money valuation.

The pre-money value is $15M ($20M post-money less the $5M invested in this round).

That amount is split between Founders & Mgmt and Series A according to their share count.

Thus, Founders & Mgmt own $9M ([15M out of 25M pre-money shares] * [$15M pre-money value]) and Series A

investors own $6M ([10M out of 25M pre-money shares] * [$15M pre-money value]).

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
$9,000,000
Series A Investors
10,000,000
$6,000,000
Series B Investors
25.0%
$5,000,000
Series C Investors
Total
100.0%
$20,000,000
Pre-money value (sum of all amounts before current investment round)
Amount invested in current round
Post-money value

Now that we know both the share count and share value for Founders & Mgmt and Series A investors, we can calculate the price per share.

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
$9,000,000
Series A Investors
10,000,000
$6,000,000
Series B Investors
25.0%
$5,000,000
Series C Investors
Total
100.0%
$20,000,000

Now that we know both the share count and share value for Founders & Mgmt and Series A investors, we can calculate the price per share.

Founders & Mgmt hold $9M of value in 15M shares, implying a $0.60 price per share.

Series A investors hold $6M of value in 10M shares, implying a $0.60 price per share.

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
$0.60
$9,000,000
Series A Investors
10,000,000
$0.60
$6,000,000
Series B Investors
25.0%
$5,000,000
Series C Investors
Total
100.0%
$20,000,000

Now that we know both the share count and share value for Founders & Mgmt and Series A investors, we can calculate the price per share.

Founders & Mgmt hold $9M of value in 15M shares, implying a $0.60 price per share.

Series A investors hold $6M of value in 10M shares, implying a $0.60 price per share.

NOTE: If these values are not equivalent, then something is wrong!

The price per share must be the same for all shareholders.

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
$0.60
$9,000,000
Series A Investors
10,000,000
$0.60
$6,000,000
Series B Investors
25.0%
$0.60
$5,000,000
Series C Investors
Total
100.0%
$0.60
$20,000,000

From the $ value of the investment and the price per share, we can calculate how many shares new investors would purchase.

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
$0.60
$9,000,000
Series A Investors
10,000,000
$0.60
$6,000,000
Series B Investors
25.0%
$0.60
$5,000,000
Series C Investors
Total
100.0%
$0.60
$20,000,000

From the $ value of the investment and the price per share, we can calculate how many shares new investors would purchase.

At $0.60 per share, a $5M investment would purchase 8,333,333 shares ($5M / $0.60).

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
$0.60
$9,000,000
Series A Investors
10,000,000
$0.60
$6,000,000
Series B Investors
8,333,333
25.0%
$0.60
$5,000,000
Series C Investors
Total
100.0%
$0.60
$20,000,000

Add all shares to get the total share count.

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
$0.60
$9,000,000
Series A Investors
10,000,000
$0.60
$6,000,000
Series B Investors
8,333,333
25.0%
$0.60
$5,000,000
Series C Investors
Total
33,333,333
100.0%
$0.60
$20,000,000

Finally, divide share counts by the total number of shares to get the percentage of ownership for each shareholder group.

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
45.0%
$0.60
$9,000,000
Series A Investors
10,000,000
30.0%
$0.60
$6,000,000
Series B Investors
8,333,333
25.0%
$0.60
$5,000,000
Series C Investors
Total
33,333,333
100.0%
$0.60
$20,000,000

Congratulations! Look back at step 2b and see how far you've come.

With nothing more than simple arithmetic, you have completed the entire cap table.

Like solving Su Doku puzzles, there is no complex math to be done.

The trick is stepping through the puzzle in a logical sequence, filling in one box at a time.

# of Shares % Ownership Price per Share $ Value
Founders & Mgmt
15,000,000
45.0%
$0.60
$9,000,000
Series A Investors
10,000,000
30.0%
$0.60
$6,000,000
Series B Investors
8,333,333
25.0%
$0.60
$5,000,000
Series C Investors
Total
33,333,333
100.0%
$0.60
$20,000,000