From spreadsheet to strategy: cap tables before and after a funding round

In the world of investment transactions, few things are more fundamental – or more misunderstood – than the cap table. Short for “capitalisation table”, it sets out the ownership structure of a company and underpins negotiations around valuation, dilution and control.

Yet despite its importance, cap table management is often treated as a spreadsheet exercise. In reality, it is a strategic process that requires careful consideration before, during and after a funding round.

Before the round: clarity and clean-up

Investors will scrutinise the cap table as part of their due diligence. Founders should ensure:

• all share issues are properly documented and filed at Companies House
• any outstanding options, convertible instruments (e.g. SAFEs, ASAs, CLNs) or warrants are clearly recorded so that the “fully diluted” share capital position is understood
• the current share ownership and rights align with the articles of association and any shareholders’ agreement.

Failure to reconcile these elements can delay or derail a transaction. It may also expose the company to claims from disgruntled stakeholders.

During the round: modelling and negotiation

The funding round itself will reshape the cap table. Key legal considerations include:

• pre- and post-money valuation: how much equity is being sold and at what price
• dilution: how will existing shareholders’ percentages change
• option pool expansion: will new options be created and who bears the dilution?

These issues are often modelled in spreadsheets, but the underlying legal mechanics – share allotments, class rights and pre-emption waivers – must be addressed in the transaction documents.

After the round: governance and reporting

Once the round closes, the cap table needs to be updated to reflect the new share issues and classes.

Companies should also consider engaging the Company Secretarial team at Birketts to maintain accuracy and transparency.

Conclusion

A well-managed cap table is more than a record – it is a strategic tool. At Birketts, we help founders and investors navigate the complexities of cap table management, ensuring confidence at every stage of the fundraising journey and crucially at exit.