Introduction

This article will focus on how to access and interpret a Cap Table on our platform.

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, the founder may be the only person on the Cap Table.  As it grows and gives equity to different people, the Cap Table will grow in size as you capture these updates.

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 this article:

• 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. 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 the platform and identify the Equity and Financing module. Next, click on Capitalization Table 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 one class of stock. If a company has more classes, like Common, Series Seed, Series A, and Series B stock, then it has four classes of stock or one class of common stock and three classes of preferred stock. You can find the different classes of stock listed at the top of your Cap Table.

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 dissolves, the preferred stockholders would be repaid first and the common stockholders would be repaid last if there are enough funds. Sometimes, there isn't any 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 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.
• Finally, an investor with a bridge note (or convertible note) is listed under Debt Holders.

Sometimes, an investor may own multiple types of securities -- for example, preferred stock and common stock. Your 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.
• Lastly, 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

Each line item on the cap table 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).

The Cap Table also makes note of whether shares/options were granted under the plan or outside of the plan. We include 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 of line-item entry is shown below, which illustrates how to easily 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 paper and pen icon.

Understanding the Percent Column

In our platform, 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. 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. This field is important for potential investors to see how many shares of common stock are outstanding and defines the price per share of common stock when an acquisition occurs.

Understanding Fully Diluted

If you scroll to the far right of your 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, this number includes the total of all shares granted (CSE) and counts the number of options available for issuance. To see a more granular view of the calculations performed in your Cap Table, download it to Excel to view the formulas.

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 Cap Table by clicking Capitalization Table Options, located to the left of the Export button.  In the Capitalization Table Settings screen, check the Grants Pending Approval 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 Cap Table. Click on Capitalization Table Options and check the Unfulfilled Promised Grants box.

Modifying Your Cap Table View 

Sometimes, you may want to view your Cap Table totals and percent ownership in different ways. We allow 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 configuration choices can be found via the Capitalization Table Options. 

You also have the option to create a Cap Table “as of” a certain date in the Capitalization Table Options.  The default setting will download it as of today. 

Additionally, the Excel download 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, sometimes it happens that although a holder is granted a whole number of shares, a fractional share amount will vest. The vesting is rounded according to the example illustrated below:

If a holder has 100 shares that vest over 3 years, with annual vesting, then instead 33.333 shares vesting per year over three years, the platform will round accordingly:  

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

Screenshots are for illustrative purposes only.

Fidelity and third parties mentioned are not affiliated.

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

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