Most business owners and executives know that cap tables are essentially spreadsheets. What they show is the venture capital that is available for a newly commissioned company. In fact, the cap table is likely one of the first documents created for a start-up. See more about the overall structure used for Cap Table Management.
More on Cap Tables
As described, cap tables show the financial foundation of a new business. As such, they may list the shares, warrants, and any other type of security. They will also list the names and prices of the company’s investors. As financing progresses, these cap tables will often be more complex. This is why cap table management is key.
How Cap Tables Are Made
The best way to set up your first cap table is as a spreadsheet. This document format makes it easy to list the information in different columns. As time goes on, you may find it necessary to use specialized software to get the job done. However, in the beginning, a spreadsheet should show the number of shares. It is important to list these out distinctly by class. Thus, your cap table should have columns for authorized shares, outstanding shares, unissued shares, and reserved shares.
Other Information to Include
Listing the shares alone doesn’t mean anything if they aren’t matched to investors. Therefore, the next step is to list the shareholders’ names, shares owned, and options owned. Generally, this list will start with the company’s founders, and proceed in chronological order by date.
Putting It to Use
After you have set up the basic structure, you will refer to the cap table in certain situations. You may use the data to attract new employees. You may also use it to show new investors what they can expect to receive as a return. Whatever the need, proper cap table management will be key to your company’s success.
For more assistance with cap tables, contact Colonial Stock Transfer Company, Inc. at https://www.colonialstock.com/ today.
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