S3 Cap Table Template
Goals with this template are:
1. Help entrepreneurs understand how a cap table is structured
2. Illustrate how ownership changes with valuation in Series A and Series B financing rounds
3. Increase efficiency during the diligence process
Notes to help fill out the Cap Table Template:
- Notice that the template has different colored tabs at the bottom, which will show cap tables before financing and through the Series A and Series B rounds. The last two tabs are simply summaries for easy printing.
- The only cells that need to be filled in are in blue font. All other cells will auto-populate.
‘Pre-Investment Cap Table’ tab:
- Enter your current cap table and ownership of common securities for employees here. If you have more employees than spaces in the table, you can add them up and include them in “other employees” line.
- Every employee does not need to be listed in order to understand how the ownership changes with investment.
- All of the initial share counts are place holders, and not intended to advise entrepreneurs on how to divide up stock among employees.
‘Convertible Notes’ tab:
- This tab is for companies who have taken a convertible note or SAFE investment from angel investors.
- Typically, convertible notes have an annual interest rate, a discount, and/or a cap for conversion into the next financing round. The template is set up to let you enter all variables (convertible notes often have both). If the convertible notes to your company do not have one of these variables, just enter ‘zero’ for those inputs.
- As noted in the red font, if your company has not taken any investment in the form of convertible notes, just enter zero for the “Principal Amount” in column B.
‘Series A’ tab:
- Pre-Money valuation in this example is $6 million. This means that the investors have placed a value of the current business (prior to funding) of $6 million. This number can vary widely for start-ups depending on many factors, so again, please note that this is just a placeholder for the template.
- When investors fund a Series A round, the option pool is often increased so that the company will have equity to give to new hires. Somewhere in the 10-20% range is typical for most early stage start-ups, but this depends on planned hires, current option pool size, and other factors. You will see that the options are added to the cap table prior to Series A round and therefore, included in the total share count to calculate the share price.
‘Series B’ tab:
- For companies planning to become cash flow positive on the Series A funding, this tab might not be needed. However, many companies that raise a Series A often raise a Series B round to execute on early success before becoming cash flow positive.
- Much like the ‘Series A’ tab, the ‘Series B’ tab only requires a few inputs as well – Pre-money valuation, Series B investment sizes, and option pool increase.
- In this example, we entered $18.5 million as the Pre-Money valuation. As with the earlier Pre-Money valuations, this number can vary widely depending on a multitude of factors.
- Often, when a company raises a Series B, it will be led by a new investor, who sets the price for the round. When this happens, the Series A investors often invest additional money into the round. The template is set up for this, but you could just zero out one of the investor lines if your company raises money from your current investors or the B investor financed the complete round.