Capital Structure & Governance

Investor diligence reference · April 2026 · Confidential

Analyst Note

CloudNC has raised £66M in priced equity and £17.5M in CLNs across a 10-year history, resulting in a large number of shareholders and 5 share classes. Despite the width, the structure is clean: all preferred classes rank pari passu with 1× non-participating preferences, broad-based weighted average anti-dilution, one share one vote, and zero litigation history. Single legal counsel since Series A.

Despite the breadth of the register, the governance structure concentrates decision-making efficiently. New share issuances require only Investor Majority Consent (>50% of Investor Shares), with no individual investor holding more than ~24% and many ways to assemble the threshold. Drag-along and certain reserved matters currently require Investor Director Consent from the Series A lead investors — standard for the existing stage of documentation. New investment documents are expected to modernise these provisions in line with the incoming round.

1. Capital Structure Overview

£66M

Equity raised (priced rounds)

£17.5M

Outstanding CLNs (3 tranches)

£5M

Venture debt drawn

Instrument	Amount	Key Terms	Conversion / Repayment
Equity Ordinary + Series A1–A5	£66M raised (priced rounds)	All preference shares rank pari passu. 1× non-participating liquidation preference.	N/A
CLN Tranche 1 October 2024	£12M	Cap: £2.27/share. No discount. Unsecured. Zero-coupon. 5-year maturity.	Converts at lower of round price or cap on qualifying raise (≥£10M)
CLN Tranche 2 August 2025	£3M	Cap: £2.84/share. No discount. Unsecured. Zero-coupon. 5-year maturity.	Converts at lower of round price or cap on qualifying raise (≥£10M)
CLN Tranche 3 December 2025	£2.5M issued	Cap: £2.99/share. 20% discount on qualifying round. Unsecured. Zero-coupon. 5-year maturity.	Converts at lower of (round price − 20%) or cap on qualifying raise (≥£10M)
Venture Debt Santander, July 2024	£5M drawn (of £10M facility)	SONIA + 6% (~11%). All-asset debenture. Amortises from Jul 2026. Matures Jul 2029.	Cash repayment on schedule

Key point: A qualifying equity round (≥£10M) triggers automatic conversion of all £17.5M in issued CLNs, eliminating them from the balance sheet. All CLNs are zero-coupon (no interest accrues). On conversion, the redemption premium disappears — notes simply convert to equity. A 50% redemption premium exists but only applies in a Change of Control (company sale) before conversion — a scenario designed to protect CLN holders in a distressed acquisition, which is not a realistic scenario given the company's trajectory.

Top 10 Shareholders

By issued equity

#	Shareholder	Issued %	Type
1	Atomico (combined)	14.88%	VC — Series A lead
2	Episode 1 (combined)	10.71%	Seed investor
3	Christopher Emery	10.03%	Co-Founder
4	Theo Saville	9.63%	Founder / CEO / Chairman
5	Autodesk	8.65%	Strategic
6	UK FF Nominees	3.46%	Nominee
7	Elkstone Ventures	2.92%	VC
8	British Patient Capital	2.88%	Government VC
9	Port of Hercules (Moredo Trust)	2.58%	Family office
10	Lockheed Martin	2.18%	Strategic

Top 10 hold 67.92% of issued equity. Two co-founders hold ~20%. Remaining ~32% distributed across the wider shareholder base.

2. Governance

Mechanism	Detail	IC Risk
Drag-along	Triggered by Investor Majority (>50% of Investor Shares) + Board approval with Investor Director Consent. Binds all shareholders. The cap table construction means there are many ways to assemble a 50% Investor Majority — no single small holder or coalition can block. The company has never had issues with this.	Resolved
Share classes	Ordinary + Series A1–A5. All Series A sub-classes rank pari passu with each other. 1× non-participating liquidation preference. One share = one vote (except deferred shares). Liquidation waterfall: 1. All Preferred (A, A-1 through A-5) — rank pari passu, 1× non-participating. 2. Seed Shares — small class. Primarily Episode 1, EF, and early angels. 3. A Ordinary — very small class. EF only. 4. Ordinary — Founders, employees, angels. In any outcome above a fire sale, all classes receive pro-rata after preferences are satisfied.	Clean
Pre-emption	Major Investors (≥800K shares) get 10 Business Day ROFR on new issuances. Waivable by Investor Majority. In practice: Pro-rata rights are waived by default on new rounds. The three largest institutional investors (Atomico, BPC, Episode 1) are unable to exercise pro-rata regardless, as their funds are fully deployed.	Low friction
Tag-along	Exists (Article 16). Triggers when a transfer would give the buyer a Controlling Interest — buyer must offer to purchase all other shareholders' shares at the same price. 15 Business Day acceptance window. Not triggered by a minority investment round. Waivable by Investor Majority.	Low
Co-sale	Exists (Article 17). On any transfer (except Permitted Transfers), every shareholder gets a pro-rata right to participate. 15 Business Day notice, 5 Business Day counter-notice. Not triggered by primary issuance (new shares). Waivable by Investor Majority.	Low
Transfer restrictions	All transfers require Board approval and Deed of Adherence. No free trading.	Clean

3. Board Composition

Role	Person	Appointed By	Rights
Founder Director / Chairman	Theo Saville	Founders	Voting. Chairman.
Founder Director	Chris Emery	Founders	Voting
Episode 1 Investor Director	Paul McNabb	Episode 1	Voting
Independent Non-Executive Director	Clive Scrivener	Appointed by CEO	Voting
Independent Non-Executive Director	Bartholomew Simpson	Appointed by CEO	Voting
Atomico Observer	Sasha Vidiborski	Atomico	Non-voting
Lacerta Observer	Ziad Noujaim	Lacerta	Non-voting
Santander Observer	Sergey Kuzaev	Per venture debt facility	Non-voting

The board is compact (5 voting directors) and aligned. Atomico is a board observer with no voting rights. Autodesk retains a board observer right (strategic-specific provisions expired February 2026).

Neither Atomico nor Episode 1 can unilaterally block a new share issuance — this requires Investor Majority Consent (>50% of Investor Shares) only (Schedule 3, Part 1). However, the drag-along mechanism requires Board approval with Investor Director Consent, meaning both must approve to compel minority shareholders to participate in a sale. Both investors are cooperative.

4. Consent Chain for New Round

What's needed to close:
1. Investor Majority (>50% of Investor Shares) — All major holders are cooperative.
2. Board approval — Board is aligned — 2 founder directors + 2 CEO-appointed NEDs out of 5 voting directors.
3. Pre-emption waiver — or 10 Business Day ROFR period. Historically waived; major holders' funds are fully deployed.
4. No Santander consent required — equity raise does not trigger any debt covenant.

No structural impediments to closing. No minority shareholder can block.

5. Cap Table Diligence Checklist

Comprehensive review of common cap table risks against CloudNC's actual documentation.

Capital Structure

#	Risk	Status
1	Stacked or participating liquidation preferences	Clear All 1× non-participating, pari passu.
2	Full ratchet anti-dilution	Clear Broad-based weighted average only.
3	Uncapped or low-cap convertibles	Clear Three CLN tranches, all capped. Auto-convert on qualifying round.
4	Cumulative or compounding dividends	Clear None. All dividends pari passu, pro rata.
5	Conflicting consent rights across series	Clear All strategic matters require Investor Majority only.
6	Pay-to-play provisions	Clear None exist.
7	Warrant coverage from bridge rounds	Clear No warrants. Santander facility has success fee on exit only, no warrant coverage.

Investor & Governance

#	Risk	Status
8	Broad information rights across all shareholders	Clear Limited to ~5–6 Major Investors (≥800K shares) only.
9	Dead or unreachable investors blocking consent	Clear Drag-along compels. Investor Majority has always passed previously; typically achieved within 1 week.
10	Side letters	Clear Autodesk had one; expired. No others.
11	Sanctions / OFAC exposure	Clear Investor base screened. Clean.
12	Secondary sales with incomplete documentation	Clear Formal ROFR/co-sale process. Pre-approved secondary authority.
13	Board seats held by economically irrelevant investors	Clear Board compact (5 voting). Only Episode 1 holds investor director seat.
14	Most favoured nation (MFN) clauses	Clear None. CLN has anti-dilution adjustment mechanism only.

Employee & Options

#	Risk	Status
15	409A valuation risk	N/A UK company. Not subject to Section 409A.
16	83(b) election failures	N/A UK company.
17	Unformalised equity promises	Clear None.
18	Leaver shares still held by departed employees	Managed 3.37% of diluted. Passive holders, no governance rights. Drag-along compels.

Legal & Documentation

#	Risk	Status
19	Incomplete or contradictory corporate records	Clear Single counsel since Series A.
20	Missing or unsigned stock purchase agreements	Clear Low risk — single counsel since Series A.
21	Incorporation / redomiciliation complications	Clear Always been UK Ltd. No entity conversions.
22	ROFR / co-sale tangles on secondaries	Clear Waivable by Investor Majority. Pre-approved secondary authority.
23	IP assignment gaps	Clear Cleanly assigned.
24	Litigation	Clear Zero. None pending, threatened, or historical.

Structural Risks

#	Risk	Status
25	Drag-along thresholds impossible to meet	Clear Investor Majority has always passed previously; typically achieved within 1 week. Top 10 hold ~68%.
26	Shadow preferred / founder super-voting	Clear One share = one vote across all classes.
27	IPO ratchet guarantees	Clear None.
28	Change of Control trigger on debt	Clear Requires >50% ownership change. Not triggered by minority investment.

Debt Interactions

#	Risk	Status
29	Cross-default: Santander ↔ CLNs	Managed Exists (threshold >£150K). Low practical risk: CLNs auto-convert on qualifying round.
30	Key person clause in debt facility	Clear None.
31	Debt covenant headroom	Clear ARR at ~530% headroom. Cash at ~1.5 months runway.

Governance Specifics

#	Risk	Status
32	Atomico / Episode 1 can block new share issuance	Clear Neither can. Requires Investor Majority Consent only.
33	Atomico / Episode 1 drag-along consent	Managed Both have Investor Director Consent right on drag-along (Article 15.1). Both are cooperative.
34	Articles amendment requires multi-layer consent	Managed 75% special resolution + Investor Majority + class consents if varying rights. Achievable with cooperative investor base.
35	International shareholders / withholding tax	Low Some non-UK entities across the shareholder base. Relevant on exit distributions.

Checklist summary: 27 clear · 2 not applicable · 4 managed · 1 low · 0 red flags.

CloudNC Ltd · Company number 09821257 · 1 Norton Folgate, London E1 6DB
Prepared April 2026. For investor diligence purposes. Consult legal counsel for formal opinions on any provisions referenced herein.

Legal counsel: Single counsel relationship since Series A
Source documents: Amended & Restated Shareholders' Agreement (June 2022) · Articles of Association · CLN Instruments (Oct 2024, Aug 2025, Dec 2025) · Senior Sterling Term Facilities Agreement (Jul 2024, Banco Santander)