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Get Started with the Cap Table and Exit Waterfall Tool

An overview of the free Cap Table and Exit Waterfall Tool.

The goal of this model is to show how to build a cap table and an exit waterfall, for a variety of situations, plus provide a working capital table to use for (almost) all situations. The base cap table and exit waterfall sheets comprise the working capitalization table to use for your business, the rest of the sheets are instructional tools to cover specific situations to help you build and manage your own cap tables in spreadsheets. 1

How it works

The model comes with a number of sheets to help detail how cap tables work. They are independent, and you can hide or delete any sheet that is not relevant for your usecase.

  • 1 - Base Cap Table is the default, fully-featured Cap Table that has the full range of features explained in the instructional sheets already built in. It demonstrates issuing an option pool (in premoney and/or postmoney) and note issuance and conversions, with options for all four note/SAFE conversion methods. This is the model you can use to outline your cap table through a number of rounds and situations.
  • 2 - Equity Issuance is an example cap table that demonstrates a simple issuance of a first round of equity
  • 2 - Equity Issuance Round 2 is an example cap table that builds on the first issuance to show what happens with a second round of equity
  • 3 - Premoney Option Pool demonstrates creating an option pool in the premoney (explanation on the sheet)
  • 3 - Postmoney Option Pool demonstrates creating an option pool in the postmoney (explanation on the sheet)
  • 3 - Option Pool, 2nd Round demonstrates how an option pool is added to in a second round of financing, and is built to handle both premoney and postmoney option pools
  • 4 - Convertible Issuance demonstrates issuing a new convertible note.
  • 4 - Conversion, Premoney demonstrates converting a convertible instrument at the next round using the premoney method (v1 of the Cap Table Tool only used this method)
  • 4 - Conversion, Postmoney demonstrates converting a postmoney SAFE using the method for calculating the share price under these documents
  • 4 - Conversion, % Ownership demonstrates converting a convertible instrument at the next round using the percentage ownership method
  • 4 - Conversion, $ Invested demonstrates converting a convertible instrument at the next round using the dollars-invested method
  • 5 - Exit Waterfall Distribution shows how the shareholders earn proceeds at different valuations based on a variety of assumptions about the terms of their shareclasses. This is the most detailed and most complex part of the instructional sheets. It is a standalone sheet, and can be easily used with any of the cap table examples or your own model.
  • 6 - VC Valuation is a separate tool, not connected to the other instructional sheets, that creates a valuation and returns (proceeds, ROI, IRR) forecast for a given investment. Optionally, this can create probability-weighted values.

How to use

A few things to remember in using the tool:

  1. Each sheet is independent from each other. Choose the sheet you need for your situation, and hide or delete the rest.
  2. Any number in blue with grey shaded background is an input (i.e. an assumption or data point that can be changed), anything in black is the result of a formula. Change blue at will, change anything in black with caution (know what you are doing)
  3. All cells and formulas are unlocked - as in all Foresight models - so that you can make edits as needed and completely understand what is going on.
  4. The sheets are extensively noted to provide context, detail, and instructions on what the terminologies mean and how to use the model.
  5. All assumptions are illustrative ONLY, do not assume they are market data or standard unless specifically noted
  6. Notes on what’s changed in versions of the template are on the “Changelog” sheet.
  7. Note: There are a couple “yes/no” dropdowns for turning on circular references in a couple sheets. Essentially, I build models to not require circulars, but some calculations on cap tables require iterative calculations (i.e. the calculation is based on something referring to the calculation), so to do this you must turn on iterative calculations in Excel / Google Sheets to handle the calcs. The formulas are written so that there is a non-iterative variation, but for some situations you will need to turn on circular references to get the exact calculation. By default, these flags are “no” so that you do not get a note about circular references in the model.

A couple simplifying assumptions are built into the model.

  1. Prorata for existing investors into future rounds is an input, not calculated
  2. Down rounds or recapitalizations will require some restructuring for the appropriate recap round and any anti-dilution provisions.

v2.56 of the model introduced a new structure for the Exit Waterfall to allow different shareholder classes to be pari-passu, instead of structurally assuming each round is senior to the previous round.

The most common way to use the cap table is to start inputting the assumptions for your known rounds on the Base Cap Table sheet, and then if desired start inputting projected rounds to see their full impact on ownership, dilution, and value. Once you have that setup, go to Exit Waterfall and edit the pre-distribution cap table by linking in the number of shares, options, and investment amounts for each investor from your cap table, and adjust any liquidation preference assumptions.

If you get stuck on anything, that’s the perfect time to check out the relevant instructional sheet, which are by design built to be simpler to understand and follow. I’ve also created additional demo videos for the instructional sheets:

Inputs

All inputs for each sheet are on the relevant sheet. By default none of the sheets are linked to each other, so that you can easily choose which sheets you want to use and hide or delete the rest.

Common Modifications

Cap tables can be highly specific to the situation, and often require editing to fit one’s specific structure. Editing is common, and I provide a range of services to help setup cap tables and evaluate exit waterfalls, learn more at Support and Customization →

The exit waterfall can be used independently if you already have a cap table, or export your cap table from any of the web-based cap table management solutions into Excel or Google Sheets. Just take your export, copy the Exit Waterfall sheet into your model, and link the exported cap table shares, share prices, and investment amounts into the pre-distribution setup in the exit waterfall.

Should I use this to manage my cap table?

As a reminder, this model is created to be a sample cap table to help you understand how a cap table works, and how ownership is impacted by investment rounds and valuations. Once you’re running a company, I highly suggest using an online cap table management platform, such as:

The realities of managing a cap table through all different investment terms, option grants, exercises, conversions, and more, can be daunting and it can be easy to make simple errors with meaningful impacts. Through early rounds it’s fine to manage the numbers with a spreadsheet, but the online tools do a great job of managing the numbers and add on a number of features that make managing the practicalities and paperwork involved much easier.


  1. One of the major changes I made in v2 of the Cap Table tool was to improve on the instructional side of v1 - meaning, v1 worked, but it didn’t really explain why the cap table worked that way. For v2, I wanted to show a lot more examples, particularly because for many people building your own cap table specific to your situation is the right way to do it. The default Exit Waterfall, in fact, can take editing to make it fit your situation depending on how you use the default Cap Table itself. We often have unique situations or adjustments that are almost impossible to build into a useable spreadsheet template without an wide array of setup features that would be unused by the vast majority of people. You may need to build your own cap table and exit waterfall from scratch - and thus, that’s why I built the instructional sheets to help you build your own.