Startup Cap Table Template - Setting Up the Scenario
A Startup Cap Table template is an important tool for investors seeking to obtain a complete picture of a company's capital structure before investing in it. startups is usually a spreadsheet, most often used by new start-ups or soon-to-be small businesses, which clearly identifies the ownership structure of the business. The spreadsheet shows who owns what, how much everyone owns and what value each individual stockholder is assigned. It then gives the value of all outstanding shares. Investors can then calculate how much money they could potentially receive by purchasing shares from the company.
A startup cap table template can be an important part of a due diligence investment process. Due diligence is the process of investigating a business before an investor makes an investment, to determine its valuation, and the amount of risk associated with that investment. By using a cap table, an investor can have a complete outline of the current value of the business's equity as well as the potential gain when they sell all or a portion of their shares. Investors can also obtain this information online.
Because every business is unique, no two investors will have the same knowledge about the startup cap table. In order to obtain a reliable snapshot of the current value of the business and potential gain if they sold all or a portion of their shares, the investors must create their own worksheet, one customized to their own business. This Excel sheet should contain all of the required information for the investors to calculate a realistic value of the business. The startup capital table template should include the name and ticker symbols for each individual share. The name of the share should be entered in the left-hand cell. startups in the lower right-hand cell should be updated to show the current value of each share.
If there are more than one founder, then separate lines for each one on the startup cap table template should be created. The investors should enter their own personal information for each owner. These should include their name, address, phone number, email address, stock ownership, warrantees (if any), the dollar figure being invested, and the dates these shares were purchased. A couple of charts should be provided to help with comparing total shares to sales revenue and cost per share.
startups should ensure that they understand the risks associated with their investment and how they will deal with them during the startup stage. Forming a startup committee is a very good idea to educate these individuals. The meetings should be open to the shareholders to ensure that they know what is going on. These meetings should include a presentation about the startup by someone with the experience of founding companies, giving the shareholders a hands-on overview of how equity management works.
The actual equity investment details should also be included in this section. The numbers should be broken down into positive and negative terms. Equity will be raised from both private investors as well as from the company itself. In general, startup cap tables will have a few different numbers for each category to give the shareholders some idea as to what the numbers mean.
The final section for startup cap tables should include the post-money purchase option for an initial public offering (or IPO). The shareholders will be allowed to sell as many shares as they want. It is recommended that only a small percentage (around 10%) be sold at any one time. This allows investors to make money off of many shares at one time while the company gains traction.
In conclusion, a startup cap table template should include several different scenarios for possible investors who want to invest in the company. Sharing profits with the early investors is often one of the best ways to increase investment capital. However, startups is also one of the most risky because the founders may not have much experience in the industry. For these reasons it is always best to keep these aspects separate from the sales of shares to the public in order to protect the equity holders.