How to build a cap table

  • 6 mins read

How to build a cap table

When embarking on the fundraising journey, you will inevitably come across the term “cap table,” short for “capitalisation table.” Essentially, a cap table is a table that outlines the distribution of ownership stakes within a company, including the allocation of shares among founders, investors, and other stakeholders. Some cap tables also provide additional details such as share classes and varying percentages of voting rights (which may differ from ownership percentages).

Initially, constructing a cap table for a startup is relatively straightforward. However, it can become increasingly complex to manage as subsequent funding rounds occur. At Inverse, we specialise in assisting founders with building their cap tables and other essential documents needed to initiate a funding round. 

In this article, I will present examples of a typical cap table during an angel round, incorporating an options pool reserved for key employees. Additionally, I will provide you with a template cap table that our clients have successfully utilised to secure funding from angels, venture capitalists, and crowdfunding investors. 

If you’re interested in obtaining a copy of the template, simply comment on the post and I’ll DM you the link. This template cap table has been used by our clients to secure funding from angels, top venture capitalists, and crowdfunding investors.

Below, I’ll provide an example and step-by-step guide to help you build your own cap table.

Last but not least, feel free to connect with me on LinkedIn and follow our Inverse account, where I frequently publish articles on financial models and fundraising.


Cap table – two sides

In its most basic form, a cap table consists of two sides: one illustrating the company’s current ownership structure and another reflecting the post-funding scenario. This enables all stakeholders to comprehend their ownership positions before and after the infusion of funds.


Let’s consider a startup that has issued 9,000 shares to its founders and existing shareholders. Additionally, they have set aside 1,000 options (10% of the total shares) for their key hires. This information is depicted in the table on the left.

Now, suppose the startup proceeds to raise £100,000 in fresh funding at a pre-money valuation of £900,000. This implies that the investors will receive a 10% ownership stake (thus diluting the shares held by existing shareholders/founders by 10%).

One of the shareholders, Shareholder B, exercises their pre-emption right and invests £10,000 in this round, allowing him to receive 1% new shares and to maintain their 10% shareholding. Consequently, £90,000 remains available for new investors, who collectively receive a 9% equity stake.

As a result of the funding round, the options pool experiences dilution, decreasing from 10% to 9%.

Cap Table


  1. On the left side of the cap table, outline the existing shareholders and their respective shareholdings.
  2. Determine the inclusion of options, if applicable. Often, founders and investors engage in discussions regarding the pre-funding or post-funding percentage of options, which can then be used to calculate the actual number of options.
  3. On the right side of the cap table, insert the investors participating in the funding round and specify their respective investment amounts.
  4. Decide on the pre-money valuation of the company.

The cap table provides some key information for stakeholders

  1. The founders currently hold a 70% ownership stake, which will be diluted to 63% after the funding round. It is crucial to assess whether this level of ownership provides sufficient incentives and motivation for the founders. Additionally, considering potential future investment rounds, further dilution is expected. Notably, decisions requiring special resolution will necessitate the approval of 75% of shareholders, underscoring the founders’ need for support from their shareholders.
  2. At present, the company has two shareholders who collectively own 20% of the company. Notably, one of these shareholders is a “follow-on” investor, indicating their confidence in the business and willingness to invest further.
  3. In this particular funding round, investors will receive a 10% equity stake at a pre-money valuation of £900,000. Evaluating whether this percentage adequately incentivises investors and how it compares to similar companies in the market is crucial.
  4. The startup has set aside a 10% options pool reserved for key employees. This strategy enhances the likelihood of attracting talented individuals at lower wages, thereby reducing the startup’s burn rate during this initial phase.

There are a couple of important formulas every founders should know

Post money valuation = pre-money valuation + Cash raised

Share price = pre-money valuation  ÷ total shares (including options) pre-funding

Total equity offered = cash raised  ÷ Post-money valuation

Equity offered to individual investor = investment amount  ÷ Post-money valuation

Options Pre-funding or Post-funding?

Let’s consider a case where the investors required the options to have 10% ownership ‘Post-funding’, we’ll need to work backwards. You can increase the number of options until the post funding shows 10%, or, we can use the Excel feature ‘Goal Seek’ to compute the number.

Post-Funding 10% Options

Goal Seek (Excel tips)

The “Goal Seek” function in Excel is a powerful tool that allows you to find the input value needed to achieve a specific desired result in a formula. It is particularly useful when you have a target value in mind and want to determine the input required to achieve that target.

To use the Goal Seek function in Excel, follow these steps:

  1. Go to the “Data” tab in the Excel ribbon and click on the “What-If Analysis” button. From the drop-down menu, select “Goal Seek.”
  2. A dialog box will appear. In the “Set cell” field, refer to cell N43 in this template. 
  3. In the “To value” field, enter the desired target value that you want to achieve (in our example, use 10% or 0.1000)
  4. In the “By changing cell” field, specify the reference to the input cell. In our case it will be cel G43.
  5. Click on the “OK” button, and Excel will calculate the value needed in the input cell to achieve the desired target result.

Goal Seek Function on Excel


I have written a separate article on the impact of investors with liquidation preference which you can read about it here. In here, I explained how investors can get their return beyond the simple equity ownership.

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