How to Build Cap Table for your Startup | Jordensky

Your capitalization table, or cap table for short, is a list of the shareholders in your company. It is a current list of shareholders (founders, investors, and employees), including:

• Their shareholding (how much they own)
• The class of shares they each own in your company,
• The price and rights associated with those shares

Your cap table is always changing. Imagine that you need to adjust the numbers for each new hire you give options or shares in your company.

Your investors are providing you money, so it is your responsibility to ensure that the cap table is kept up to date

The majority of startups save their cap table on Excel or Simple Word Document.

Excel Solution

Try exploring with Venture Hacks' streamlined Excel Cap table. (Please note that this table does not take into account warrants, vesting, debt interest, liquidation preferences, dividends, or the Series B; yet, it is still a fantastic learning tool.)

The issue is that share classes and the rights attached to them can become extremely complex, and when combined with the numerous adjustments made during deal negotiation and the changes made through several funding rounds, it quickly spirals out of control. Furthermore, you won't be able to conduct your next investment round until you regain control over who owns what in your business.

Online Solution

A wonderful alternative to using Excel is to use online cap table management tools, which will save you hours of effort and give you a simple table that you may expand over time. However, they could also necessitate a lot of time-consuming human data entry. Your finance and HR departments, who will input the specifics of your new contracts into the system as your business expands, will typically be in charge of managing your cap table information.

Automated Solution

As more startups expand in size, join the unicorn club, and even achieve an Exit or Liquidation, the use of a well-constructed automated Cap Table is most important for the companies. The transformation from a spreadsheet-based cap table to an automated digital one is a game-changer for many reasons, including the development of numerous reports and, most crucially, a scenarios input for any future change in the company, no matter how complex or far off it is.