Cap Table Basics: Understanding Your Startup's Ownership Structure

A capitalisation table (cap table) is the definitive record of equity ownership in your startup. It shows who owns shares, what type of shares, what percentage of the company each person holds, and what everyone receives in an exit scenario. Getting it right from day one saves enormous legal and financial trouble later.

What a Cap Table Includes

• Founders: shares held, vesting schedule, class of shares
• Investors: investment amount, valuation at investment, share class (ordinary, preferred, etc.)
• ESOP pool: total authorised, issued, and available options
• Option holders: employees or advisers with granted options, strike price, vesting status
• Convertible instruments: SAFEs or convertible notes that will convert into equity at the next priced round

Share Classes

Most Luxembourg S.à r.l. companies start with simple equity (parts sociales). As you take investment, you'll typically create:

Ordinary shares / parts sociales: held by founders Preferred shares / parts préférentielles: held by investors, typically with liquidation preference (paid out first in an exit) and anti-dilution protections

The liquidation preference matters most in below-expected exits. If investors have a 1× non-participating liquidation preference and the company sells for less than the invested capital, investors get their money back before founders receive anything.

Fully Diluted Share Count

The "fully diluted" view shows ownership assuming all options and convertibles have been exercised. This is the number investors use when calculating your pre-money valuation.

Always calculate ownership on a fully diluted basis — not just issued shares — to avoid nasty surprises.

Reading the Cap Table at Exit

• Investor with 1× non-participating liquidation preference on €1M invested: receives €1M first
• Remaining €9M distributed pro-rata to all shareholders
• If founders own 60% of remaining shares: €9M × 60% = €5.4M

The order of distribution (waterfall) is defined in your shareholder agreement and investment terms.

Common Cap Table Mistakes

• Starting with wrong ownership split: address this at founding — changing it later is expensive
• Not issuing shares correctly: in Luxembourg, share transfers in an S.à r.l. require notarial deed
• Forgetting advisers: adviser shares with improper vesting create problems
• Not keeping it updated: every investment, grant, exercise, or transfer must be recorded

Build and Model Your Cap Table

[👉 Use the Cap Table Calculator](/calculators/cap-table)

Enter your stakeholders, share classes, and investment terms to build a cap table — and model proceeds at multiple exit valuations to see who gets what.