The cap table: how to manage it from day one
The cap table (capitalisation table) is the snapshot of who owns what in your company: quotas or shares, percentages, convertible instruments, options. It looks like an administrative detail, but it is one of the first documents an investor asks for. A messy cap table can slow down — or derail — a round. Here is how to manage it well right from day one.
What a cap table contains
In a Swiss GmbH or AG, the cap table records at least:
- members/shareholders and their stake (in CHF of capital and as a percentage);
- convertible instruments outstanding (convertible loans, SAFEs) with their terms;
- options and incentive plans reserved for employees, even if not yet exercised;
- the expected dilution effects at the next rounds.
The aim is that anyone reading it can understand in two minutes who controls the company and what happens when new capital comes in.
Why keep it clean from day one
Many problems arise at the start, when the topic seems premature. Some frequent examples:
- founders with unbalanced stakes without an agreement on what happens if one leaves;
- quotas promised verbally to early contributors, advisors or first employees;
- no vesting: whoever receives quotas keeps them even if they leave after three months;
- documents scattered across emails, PDFs and minutes never formalised.
Sorting out these knots later, when there is an investor at the table, costs time and bargaining power. Doing it earlier is almost free.
The shareholders’ agreement and vesting
The cap table is a number; the shareholders’ agreement is the rule behind that number. It defines the rights and duties of the members: pre-emption, drag-along, tag-along, governance, and above all the vesting and leaver clauses.
Vesting makes the quotas accrue over time (for example over four years, with a first tranche after twelve months). It serves to protect the company: if a co-founder leaves early, they do not take a huge slice of the capital with them. For investors it is a sign of seriousness.
Dilution: understanding the maths
Every time you issue new quotas, capital comes in, but the existing percentages shrink. Dilution is not a bad thing in itself: owning a smaller slice of a much bigger pie is often an excellent deal. The point is to plan for it.
Before every round, build a pre-money and post-money cap table: how much capital comes in, at what valuation, how many new quotas are created, how everyone’s percentages change. Remember to include convertible instruments and options: they convert at the following round and dilute too. Ignoring them leads to unpleasant surprises.
The pool for employees
If you plan to attract talent with quotas or options, set aside a dedicated pool (option pool) in good time. Investors often ask for the pool to be created before they come in, so that the dilution falls on the founders and not on them. Knowing in advance how much room to allocate to the pool saves you from negotiating it on unfavourable terms.
Mistakes it is best to avoid
- Too many small members at the start: a fragmented cap table scares investors and complicates decisions.
- Quotas to advisors without vesting or clear objectives.
- No single source of truth: the cap table must be a living document, updated at every operation and consistent with the commercial register and the minutes.
- Confusing percentages and amounts: in Switzerland the share capital is expressed in CHF, and the quotas must be kept aligned with the official deeds.
How we help you
At SIH ONE we support founders in building and maintaining the cap table: corporate structure, shareholders’ agreement, vesting, employee pool and dilution simulations ahead of rounds. An orderly cap table is not bureaucracy: it is what makes a company investable.
Want to put your structure in order before the next round? Talk to the Ventures division.