In this example, we're going to build a complex cap table, which includes not only the percentage ownership that each different investor has within the equity element of a company, but also the number of shares and the effective share price as we go through different rounds of fundraising.

The calculations will be on this tab, the tab, and this will all feed through to the tab to the right, the complex cap table tab. We're gonna assume that the company has two co-founders, the CEO and the CTO, the Chief Technology Officer, and they both have an equal weight in the company shares when it was set up. When they founded the company, they issued themselves 2 million shares, which had a par value of $0.001. The calculations here are relatively straightforward in that the CEO is gonna have 50% of the shares issued, and if we lock onto the number of shares issued, I can copy that down to get the total number of shares back to 2 million. And the stake that each has then is the number of shares divided by the total, and we'll hit F4 to lock onto that total to give us those numbers. The next step we'll have a look at is where some stock options are being offered to early employee hires. We're gonna be setting up an employee stock option pool. This is where we have 7.5% of the shares that are currently an issue being allocated from the co-founders into the stock option pool for 7.5%. So let's put the numbers in for that. That's gonna be 7.5% of the total number of shares in issue, which we had as 2 million. The founders will be allocating out of their own stake of 1 million shares each. So as a result, we can take the 1 million shares that they had and deduct from that, the total allocated to the ESOP divided by two.

This will be the same for both of the co-founders. If we then add up, we get a total of 2 million and we can figure out what each individual person's stake now is by copying that formula down. So by setting up the stock option pool for the early employees, the initial founders have given up 7.5% of their stake to reduce their stake down to 46.25% each in the company, which is just rounded to 3% here, we can get all of this information into the cap table. So from here on, the founders won't be giving any of their initial shares up, but they did do that to set up that early employee stock option pool. So they now have 925,000 shares each. We can get that into the cap table. We're also going to show the employee stock option plan as three separate tranches, but they are stock options. So I'll keep that over in the stock option column. For the 150,000 shares that we have there, I'll set up some Totals down the bottom here as well so that we can see the total number of shares that the company has at each stage as we go across. And this will then give us a total number as well. So let's get the total calculations across the right hand side as well so that we have everything that we need over on the right hand side. We can also calculate the percentage ownership. The fully diluted ownerships are taking into account the stock options as well by dividing each person's share ownership by that 2 million shares that we have at the moment in issuance. So this is giving us the same numbers that we had on the calcs tab. We're gonna add to this as we go across. So let's now have a look at the seed round where there's a seed capital investment of $1 million we're told, and it's gonna equate to 10% of the business after this injection has taken place. And there are four separate seed capital investors here, two family offices and two angel investors. What we need to think about here is the number of shares that are going to be created to represent 10% of the business after this injection of 1 million has taken place. So what we need to do, first of all, is see what this 1 million injection being equating to 10% of the business means for the value of the business as a whole. So if we take the 1 million and divide it by the 10%, then we get 10 million. This is effectively telling us that if 1 million is 10% in the business, then the whole business must be worth 10 million. And that's great because if we know the whole business is worth 10 million and the new investors have an investment that is worth 1 million on the day, they make the investment, the value of the company that this implies for everybody else, the existing investors and the shares sitting in that early employee ESOP must be 9 million. Now, those existing investors have shares that are worth 9 million and they have 2 million shares that represent the ownership as a result, that implies a price per share of 450.

And if the existing investors 9 million of value, 2 million shares have an implied value of 4.5, then the 1 million of new investment into the company must also be represented by shares that have a value of 4.5. So how many shares do we need to create to give to these seed investors to represent that 1 million investment in the business? Well, it's gonna be the 1 million invested divided by the implied share price of 4.50 to give us 222,000 shares that need to be created. We're gonna create, as a company, 222,222 shares, give those to the new investors, and that will then represent 10% of the business. Let's just prove that's the case. We're gonna keep a tally of what each individual investor has. So the first family office makes up 25% of the seed round, and we multiply that by the total 222,000 shares being created by lock onto that cell C37. I can then copy this down to say that every one of these four investors is getting 55,555 shares, and if they're getting that 55,000 to 555 shares with an implied value of 4.50, and I can now lock onto that, that effectively gives us 250,000 each and therefore a total number of shares back to the 222,000 and a total amount invested total of 1 million.

So what does this mean the company will look like after this seed capital investment has taken place? Well, the number of shares that the co-founders will have each will still be the 925,000 as it was from before. The employees will still have the 150,000 of shares allocated to them through the stock options, but the new investors are gonna be given this 222,222 new shares, meaning that in total the company will allow, have 2,222,000 shares, and then we can calculate our stakes. 925,000 shares as a percentage of this total means that the co-founders will see dilution of their ownership rights from 46.3% down to 41.6%. The early employees that were allocated 7.5% dilution of their stock holding as well, and the seed investors will end up with 10% of the shares in the company.

Okay, let's get that into the complex cap table. We've got each of these four investors, the two family offices and the two angel investors contributing $250,000 to the company, which is represented by 55,555 shares.

If we then copy this across to the totals on the right hand side, we want to bring the capital amount and also the number of shares across to the right hand side and then copy this down. We should also be able to copy the percentage ownership down as well so that each of these angel investors or seed capital investors has a 2.5% stake in the company giving us 10% overall.