
Ask HN: Should a shareholding employee have access to the companies cap table? - shareshelp
Hi HN,<p>Long time lurker. Recently jumped into the world of startups.<p>I recently accepted a job working as a developer for a startup in NY that just completed Series A funding. In my employment offer, they promised me 0.75% worth of shares at the companies current valuation.<p>I&#x27;m working through the paperwork now with the company lawyers and it only specifies the number of shares that are being issued to me. It&#x27;s my understanding that the number of shares are a worthless number without knowing how many shares have been issued in total. Is this correct?<p>What&#x27;s the standard practise for an employee to know how many shares have been issued in total? Is it reasonable to expect the company to give me access to the full cap table? What about for future rounds of funding? Even after I leave the company but vest shares?<p>Thanks for your help.
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jeronpaul
In general, I think that telling relatively early employees in a startup their
fully-diluted ownership percentage has become the norm.

I assume that this is the 0.75% worth of shares at the current valuation they
promised you. You should confirm that this represents your share of the fully-
diluted, as-converted shares of the company.

Here is more detail on what fully-diluted, as converted means:
[https://www.capshare.com/blog/how-many-shares-are-on-my-
cap-...](https://www.capshare.com/blog/how-many-shares-are-on-my-cap-table/).

If you confirm that this represents your share of fully-diluted, as-converted
shares, then you can calculate the total number of shares on the cap table by
simply dividing the number of shares you receive by 0.75%.

Regarding your other questions, every startup has a different approach to
levels of transparency about equity.

Most companies do not grant full access to the cap table to employees beyond
the founder group.

Many companies will give employees, especially key employees, a sense of their
ownership percentage after future rounds.

Companies will typically provide less information to former employees who have
left the company.

Exceptions to all of these generalities are somewhat common.

I wrote an article on this subject based on our experience with the 5,000+
companies and cap tables we manage on Capshare:
[https://www.capshare.com/blog/will-cap-table-transparency-
he...](https://www.capshare.com/blog/will-cap-table-transparency-help-your-
startup/).

~~~
shareshelp
Thanks for the in depth reply. Especially insightful to hear an opinion about
about what level of transparency most companies offer - I struggled to find
much written about it online.

FWIW, Capshare looks great - I wish my shares were being managed through it.

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tedmiston
Personally I hate that the "right" answer to this question is no.

In my experience working at seed stage, as an early employee having access to
the cap table is a given.

At mid to late stage, it's the polar opposite. Funding rounds further
complicate things because not all investors get the same terms / buy at the
same valuation. With the information available to a normal employee, it
becomes virtually impossible to value your own equity.

It's exceedingly frustrating to know you own x% of a company without knowing
the total number of shares or the total valuation.

~~~
gesman
Add to that - you may own 1% of a company and after $10M liquidation event -
you get nothing.

OR: you may own 0.0001% of a company and after $10M liquidation event - you
get $1M.

Something to consider: difference between common shares and preferred shares
with liquidation preference conditions.

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MalcolmDiggs
_" It's my understanding that the number of shares are a worthless number
without knowing how many shares have been issued in total. Is this correct?"_

Yes, this is correct.

 _" Is it reasonable to expect the company to give me access to the full cap
table?"_

No.

But, it IS reasonable for your contract to state what percentage of the fully-
diluted capitalization of the company your stock options are granting you the
right to purchase (at the time of the writing, or at a predetermined time in
the future, like at the end of an round).

All that being said: All early employees are going to get diluted eventually
(in most cases), and nobody has any way to predict how much dilution you're
going to experience over time.

So, while it may make you feel better to know exactly what your options would
be worth today, it's kind of irrelevant to what they'll be worth once you pass
your vesting cliff.

The best protection, in that regard, is to only work with people you trust. If
you're worried about being screwed-over by these people, and you haven't even
started working there yet, that might be a bad sign.

------
rahimnathwani
"It's my understanding that the number of shares are a worthless number
without knowing how many shares have been issued in total. Is this correct?"

It's more than correct :(

Even if you knew the # of shares that had been issued, you'd also need to know
the rights attached to each class of shares (e.g. some classes may have
specified liquidation preferences) and also the terms on all outstanding
options/warrants.

It sounds like you've already decided to take the offer (even without
calculating the value of your 0.75%). So your only problem now is to verify
that the # of shares in your contract matches the % in your offer.
MalcolmDiggs' suggestion (getting the company to include the % that this
represents on a particular date, in the contract) should be enough. That way,
there's no chance of misunderstanding, and there's recourse for you if it
turns out they lied.

