UNDERSTANDING CAP TABLE
CA. Abhijith Preman, FCA
Cap Table
• Cap Table summarizes
who owns what part of
the company before and
after financing.
• In the initial phase, 100%
of the shares would be
allocated to the
founders.
[Link]
What will I own if an investor invests
in my company?
• Let us solve this by an example. The company
was incorporated by A & B, with Rs. 1,00,000
capital- divided into 10,000 shares of Rs. 10 each,
divided equally among them. The cap table at
this stage would be like this;
S. Name of the No. of Value Shareholding
No. Shareholder Shares %
1 Mr. A 5,000 50,000 50.00%
2 Mr. B 5,000 50,000 50.00%
Total 10,000 1,00,000 100.00%
[Link]
What will I own if an investor invests
in my company?
• Say investor C, invests, Rs. 10.00 lakhs in your
company at Rs. 1.00 Crore valuation. So, the
investor would be holding 10% and shares and
the founders’ shares become 90%.
• So, the overall shares in the company become
10,000/90% = 11,111 shares.
• Of the 11,111 shares 10,000 shares are owned by
founders, so the balance 1,111 shares would be
given to the investor.
[Link]
What will I own if an investor invests
in my company?
• So, the new cap table will be like this;
S. Name of the No. of Value Shareholding
No. Shareholder Shares %
1 Mr. A 5,000 50,000 45.00%
2 Mr. B 5,000 50,000 45.00%
3 Mr. C 1,111 11,110 10.00%
Total 11,111 1,11,110 100.00%
• The balance amount the investor invested would
be shown under Securities Premium.
[Link]
Undiluted Cap Table
• The undiluted cap table is the cap table of the
company of the current equity shareholders.
• So, in the above case, the initial cap table would
be the undiluted cap table.
• If investor C was offered equity, then the same
would have also been part of the undiluted cap
table.
[Link]
Diluted Cap Table
• The diluted cap table is the cap table of the
company when all the other shares that are
converted to equity get converted.
• For example- the company issues CCPS or CCD
which will get converted at a future date. Then
this will form part of the Diluted Cap table.
• Similarly, the ESOP Pool also becomes part of the
Diluted Cap Table.
[Link]
Examples
• The same company: the shares given to Mr. C
was CCPS and the ESOP Pool of the company is
another 1,000 shares. The undiluted cap table
will be the same as the initial cap table.
S. Name of the No. of Value Shareholding
No. Shareholder Shares %
1 Mr. A 5,000 50,000 50.00%
2 Mr. B 5,000 50,000 50.00%
Total 10,000 1,00,000 100.00%
[Link]
Examples
• The diluted cap table will be as follows;
S. Name of the No. of Value Shareholding
No. Shareholder Shares %
1 Mr. A 5,000 50,000 41.28%
2 Mr. B 5,000 50,000 41.28%
3 Mr. C 1,111 11,110 9.17%
4 ESOP Pool 1,000 10,000 8.26%
Total 12,111 1,21,110 100.00%
[Link]
