This article will focus on how to access and interpret a Shoobx Cap Table.
A "Capitalization Table," more commonly referred to as a "cap table," is the display of all ownership (of any security) in the company. In other words, it is a written record of who owns how much of your company and through what vehicle they own it.
It shows how many shares each individual or entity has and who has the option to buy shares. Most Cap Tables also include convertible debt that may convert into shares, as well as SAFEs, KISSes, and warrants. When a company is very small, it may only have a single person on the Cap Table - the founder. As it grows and gives equity to different people, the Cap Table will grow in size as these people and their shares are written down as well.
If you are interested in learning more about the importance of a Cap Table, click here.
Click on a topic below to jump to that section of the post:
- How To Access The Cap Table
- Understanding Stock Classes
- Preferred Holders, Common Holders, and Options Outstanding
- Going Through Each Line Item
- Understanding the Percent Column
- Understanding "CSE"
- Understanding "Fully Diluted"
- Viewing Pending Grants
- Viewing Promised Equity
- Modifying Your Cap Table
- Rounding of Shares
How To Access The Cap Table
Remember, the Cap Table contains some of the company's most sensitive and secretive information, so not everyone will have access to this function in Shoobx. 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, log into Shoobx and identify the "Equity and Financing" module. Next, click on the "Capitalization Table" button and a new screen will appear. If you wish to see this Cap Table in Excel, download it by clicking on the "Excel Export" button at the top of the page.
Understanding Your Stock Classes
The Cap Table will illustrate how many stock classes a company has. A company will usually start out with common stock. If a company only has common stock, it will only have 1 class of stock. If a company has more-- for example; Common, Series Seed, Series A, and Series B stock, then it has 4 classes of stock or 1 class of common stock and 3 classes of preferred stock. You can find the different classes of stock listed at the top of your Cap Table in Shoobx.
Understanding Your Preferred Holders, Common Stockholders, and Options Outstanding
Preferred stock is usually given to investors and has the advantage of getting preferred payout when a liquidation event occurs. For example, if the company went under, the preferred stock would get whatever money was left first and the common stock would get whatever money was left last. Often times, there's no money left at this point and the common shareholders get nothing at all.
- Individuals or entities (like venture funds) who own preferred stock in your company are grouped in your Shoobx Cap Table under "Preferred Holders" and listed in order of decreasing percent ownership.
- Individuals and entities with common stock (and no preferred stock) are listed below the preferred holders, under the "Common Stockholders" heading.
- Individuals with option grants that have not been exercised will be listed at the very bottom of your Cap Table, under the "Other Options Outstanding" heading.
- Those with a warrant will be listed under "Other Warrant Holders." Those with a SAFE are listed under "Alternatives."
- And finally, an investor with a bridge note (or convertible note) can be found under "Debt Holders."
Sometimes, an investor may own multiple types of securities -- for example, preferred stock and common stock. Your Shoobx Cap Table will only list this investor as a single line item, and their various securities will be displayed in the dropdown below their name. Here's how this works:
- If an investor owns any preferred stock, they will always be displayed under the "Preferred Holders" heading.
- If a stakeholder has both common stock and options, they will be displayed under the "Common Stockholders" heading.
- Last, an investor who has a SAFE/Bridge Note/Warrant as well as preferred stock, common stock, or options will be placed in the section associated with the type of stock they own (preferred or common, as applicable).
Going Through Each Line Item
If we go through what each line item on the Cap Table looks like, you can see how useful the Cap Table can be. A line item will have the name of a person or entity that owns the shares. A person should have their full legal name as it will be the name that is on the stock certificate. (To find this, select the line item listing in the Cap Table or by way of the Stock Ledger). Each Cap Table line item will also include the number of shares or options the person/entity has (or amount of money they put in for a SAFE/KISS/Note).
A good Cap Table will also make note of whether shares/options were granted under the plan or outside of the plan. Shoobx includes information about how shares were granted with the documents that lay out the terms linked to the Cap Table line. Some of these could include part of a financing, bridge note conversion, a purchase of a warrant, etc.
Note that it's appropriate to have all shares or options granted to a person on the cap table, even if the shares or options are not vested yet. The reason for this is that it's possible they will stay with the company and earn the right to keep all those shares (or exercise all their options), so they should be included when calculating ownership.
An example line item entry is shown below, which illustrates how easy it is to see the number and class of shares owned by Raviga Capital. You can also see that Shoobx allows for direct action to be taken from the cap table, via the paper and pen icon.
Understanding the Percent Column
In Shoobx, each line item displays the ownership of shares, options, or alternatives/debt for each stock/option 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 above, Raviga Capital's percent ownership is 87.9% for Series A, because they are the majority stockholders of Series A shares. In other words, Raviga owns a total of 579,770 Series A shares which, divided by the total Series A shares issued by the company (659,556), yields a 87.9% ownership of Series A stock.
As you may have noted, underneath each stock class there are a few designations for the type of ownership, and while shares, options, and percent might be intuitive, "CSE" might be more ambiguous. The acronym stands for "Common Stock Equivalent" and it is a calculation that assumes that all options outstanding have been exercised, all shares available to be issued under the plan have been issued (or issued as options and then exercised), and that all preferred stock has converted to common stock. The reason why this field is useful is because, should an acquirer look at your company, they will want to know what they are buying you out for, which would break down to x dollars per share (avoiding the complexities of preferred stock).
Understanding "Fully Diluted"
If you scroll to the far right of your Shoobx Cap Table, you will see a column that reads "Fully Diluted." You'll notice this same entry at the bottom of your cap table, alongside the "Totals" row. Fully diluted is another word for total. In other words, your fully diluted totals per each stock class should be the number of shares granted in each class. Under the "Fully Diluted" column and the "Totals" row, you'll notice that this number includes the total of all shares granted (CSE) and counts the number of options available for issuance. If you ever want a more granular view into the calculations performed in your Shoobx Cap Table, you can download it into Excel and double click on the cell you're interested in.
Viewing Pending Grants
If your company has grants that have been approved by the Board, but have not been accepted by the grantee, you can see them in your Shoobx Cap Table by selecting the "View" button to the left of the "Export" button on the top left of the page. When the screen appears, check the "Pending Grants" box.
Viewing Promised Equity
If your company has extended equity promises to new employees, but has not yet approved these grants or issued the grants, you can also track this in the Shoobx Cap Table. You'll want to select the "View" button to the left of the "Export" button in the Cap Table and check the "Unfulfilled Promised Grants" box.
Modifying Your Cap Table
Sometimes, you may want to view your Cap Table totals and percent ownership in different ways. Shoobx allows you to model the Cap Table in the following ways; displaying only fully diluted (including the total pool), fully diluted (including granted options) or issued and outstanding shares. All of these bells and whistles can be found via the "View" button under the Cap Table heading and inside the "Excel" download.
You also have the option to create a Cap Table “as of” a certain date by selecting a particular “Cap Table Date” when downloading it into Excel. Leaving the “Cap Table Date” blank will download it as of today. Furthermore, the Excel download allows you to group holdings by investor, in case several different investment vehicles have stakes in your company.
How Does the Shoobx Cap Table Round for Partial Shares?
It's not possible for people to own partial shares; you either own the share or you don't. For example, you cannot grant Bob 45.5 shares. You can grant Bob 45 shares or 46 shares. However, sometimes it happens that although Bob is granted a full number of shares, a fractional share will vest. The vesting is rounded according to the example illustrated below:
If Bob has 100 shares that vest over 3 years, with annual vesting, then instead of him getting 33.3333 shares per year over three years, Shoobx will round accordingly:
- First vesting event: 33 shares
- Second vesting event 33 shares
- Third vesting event 34 shares.
Shoobx essentially rounds down until the person earns the full share and then gives them that full share.