A cap table solves both problems. Short for capitalization table, this document serves as the authoritative record of who owns what in your company. For founders, it’s your dilution planning tool. For investors, it’s your due diligence starting point.
Understanding how cap tables work matters whether you’re building a company, investing in Swiss startups, or joining an early-stage team with equity compensation.
What a Cap Table Actually Is
A cap table is a document (a spreadsheet, for example) showing ownership stakes in a company. At incorporation, it might contain two rows showing two co-founders each owning 50% of the shares. After a seed round, it expands to include investor names, their share counts, and updated ownership percentages. After granting employee stock options, it tracks reserved equity for your team.
The Swiss AG (Aktiengesellschaft) structure enables this system. Under Swiss law, an AG’s capital is “divided into fractional amounts (the shares),” and companies must maintain a share register listing all shareholders. Your cap table is the operational version of this legally required register.
Every cap table includes several standard columns:
Shareholder Name: Lists all individuals and entities holding equity (founders, investors, employees with vested options).
Share Class: Distinguishes between common shares (typically held by founders and employees) and preferred shares (typically issued to investors in funding rounds). Different classes carry different rights.
Number of Shares: The actual share count each stakeholder holds.
Ownership Percentage: Each shareholder’s proportion of total shares outstanding.
Fully-Diluted Ownership: Ownership percentage calculated as if all reserved but ungranted options were issued. This number matters more than raw percentage because it shows your true stake after accounting for the employee option pool.
For investors evaluating a Swiss startup, the cap table reveals not just current ownership, but also who controls decision-making power and how founders have managed dilution across previous rounds.
How Dilution Changes Your Cap Table
Consider two co-founders of a Swiss healthtech startup. At incorporation, they split equity 50/50, creating 100’000 shares with each founder holding 50’000.
Before raising capital, they establish an option pool reserving 15% of the company for future employees. This pool immediately dilutes both founders to 42.5% each, even though no employees have joined yet. The cap table now shows:
- Founder 1: 42.5%
- Founder 2: 42.5%
- Option Pool: 15% (reserved)
When they raise a CHF 1.5 million seed round, they sell 20% of the company to investors. This sale dilutes everyone proportionally. Each founder now owns 34% (42.5% × 80% = 34%), while investors own 20%. The option pool shrinks to 12% of total equity.
After a CHF 5 million Series A round where they sell 15% to new investors, each founder’s stake dilutes to approximately 29% (34% × 85% = 28.9%). The two founders collectively own 58% – just above the Swiss Startup Association’s recommended 50% threshold for maintaining meaningful control.
This progression shows why founders must plan dilution carefully. The Swiss Startup Association recommends selling 20-30% in a pre-seed round and 10-20% in a seed round specifically to preserve founder ownership through growth stages.
What Investors Look for in a Cap Table
For investors evaluating potential deals, a clean cap table signals professional management. A messy cap table raises red flags about founder judgment and creates future complications.
Healthy cap table indicators
Founders own over 50% of the company through Series A. This indicator shows disciplined fundraising and ensures founders maintain skin in the game.
Clear share class separation. Investors in Series A rounds typically receive preferred shares with protective rights (like liquidation preference), while founders and employees hold common shares. This structure is standard and expected.
Vesting schedules. Swiss investors consider it normal that founders subject their shares to reverse vesting, ensuring long-term commitment. Without vesting, a departing founder could walk away with full equity after minimal contribution.
Red flags investors watch for
Excessive founder dilution. If founders own less than 50% after Series A, it suggests poor negotiation or desperation in earlier rounds. Investors question whether founders will remain motivated with minimal ownership.
Too many small shareholders. There is no exact number for “too many”, but in general more investors means more legal work. Numerous angel investors can create administrative burdens and complicate future fundraising. Investors can explore mechanisms like shareholder pooling to consolidate ownership.
Missing or inadequate option pools. This indicator signals founders haven’t planned for talent attraction. Investors know that recruiting strong teams requires meaningful equity incentives.
For early-stage investors using platforms that provide structured deal access, cap table transparency becomes part of the due diligence package. Clear ownership documentation builds confidence.
Managing Your Cap Table as a Founder
Founders face constant pressure managing cash between funding rounds. The most common reason for startup failure is running out of money. Your cap table determines whether you can raise the capital needed to survive.
Before each funding round, model the dilution impact. If you’re approaching Series A with only 55% founder ownership, selling another 20% drops you below the 50% threshold. You either need to raise less capital, negotiate a higher valuation, or accept reduced control.
Option pool planning requires forecasting. A 10% pool might seem adequate at incorporation, but scaling from 5 to 25 employees means either refreshing the pool (diluting founders again) or offering below-market equity packages. The Swiss Startup Association notes that founders often face administrative burdens managing investor expectations across multiple stakeholders. A clear cap table simplifies these conversations.
Convertible loans can postpone cap table changes when you want to delay setting a valuation. These instruments convert to equity later, but they still affect your future ownership structure. Factor them into your dilution planning even before conversion.
Track your share register legally. Swiss law requires AG representatives to maintain access to the share register. Your cap table serves this function while also enabling strategic planning.
Common Cap Table Mistakes
Ignoring the option pool: Founders who wait until hiring their first employees to create an option pool discover the dilution hits them, not investors. Establish the pool before your seed round closes so investors share the dilution.
Forgetting fully-diluted calculations: A founder who thinks they own 40% but calculated this without including the option pool actually owns less. Always think in fully-diluted terms.
Failing to implement vesting: Even among co-founders, vesting protects against early departures. Investors expect this. Implementing vesting later requires unanimous shareholder approval and awkward conversations.
Not planning for Series B: Founders often model dilution through Series A but don’t consider the next round. If you own 51% post-Series A and plan to raise CHF 10 million in Series B, model whether you’ll still have meaningful ownership after that round.
Why This Matters Now
Thanks to platforms like CapiWell, more investors have access to growth-stage startup deals in Switzerland. As access to private capital is democratized, both investors and founders need shared understanding of ownership mechanics.
For investors, cap table analysis separates sophisticated participants from those making uninformed bets. Platforms designed to provide transparent ownership data serve this need, making due diligence more accessible for non-professional investors.
For founders, professional cap table management signals investment readiness. When you can clearly explain your ownership structure, dilution history, and option pool strategy, you demonstrate the operational maturity investors require.
The cap table is not just a legal requirement. It’s the tool that shows whether founders can reach their ownership goals while raising the capital needed to build their companies. Understanding this document is fundamental to participating in the Swiss startup ecosystem, whether you’re building, investing, or joining.
