Effect on the cap table & dilution of shares

Unlike a traditional capital increase, the issue of virtual shares does not initially affect your cap table.

This means that the share capital of your GmbH will not increase by the newly issued virtual shares. The following calculation example shows how the GmbH shares to be issued are calculated and what this means in practice.

Example calculation: 

The Dummy GmbH plans to let a VC invest in its company via virtual shares. The VC's condition is that he receives at least a 20% stake in the company through the investment.

The Dummy GmbH currently has two shareholders, Alice and Bob, and a share capital of €25,000, divided into 12,500 shares each. The nominal value per share is therefore €1.

As the VC would like to receive a 20% stake in the company in the form of virtual shares, the current value of the share capital corresponds to 80% of the future value.

Dillution of existing shares:

To calculate the value that the VC receives, the current value of the company must be divided by the future value:

25.000 / 0,8 = 31.250

If the difference is now calculated, this means that 6,250 GmbH tokens must be issued so that the VC can receive 20% of the company. The dilution of Alice's and Bob's shares can now be calculated by adjusting their shares to reflect the new fully diluted capitalization.

Alice = 12.500 / 31.250 = 0,4

Bob = 12.500 / 31.250 = 0,4

Alice and Bob now each own 40% of their company, which corresponds to a 10% dilution of their shares.

Definition: Fully Diluted Capitalization

Fully diluted capitalization (also referred to as the fully diluted cap table or “virtual total capital” – VTC) describes the total number of shares that:

have already been issued, may be exercised in the future, or may arise through conversion (e.g., put options in virtual share programs, ESOPs, or convertible loans).

Together with the currently outstanding shares, it forms the basis for calculating ownership percentages.