Feld Thoughts

FEBRUARY 9, 2016

“If you need to clean up your own cap table first – while very hard to do – it will make outside funding easier” Again, go read the post now – I’ll wait. Often, there will be asymmetry between them with your new liquidation preferences having a multiple on them where they participate for a while up to a cap. Deal with reality as a founder as well as an investor group and avoid this complexity – just clean up your cap table instead.

Cap Table 239

Cap Table Down Round Founder Liquidation Preference 239

Feld Thoughts

SEPTEMBER 2, 2011

As Finance Fridays continues, we are introducing the concept of the Cap Table. This week they set out to create their cap table and hire a CTO. Rather, it gets recorded in a document called the Capitalization Table (or “Cap Table”), which shows the ownership stake each person or entity has in the business. Time to update the cap table. When you read the cap table, think of it as a series of events that add new columns to the right.

Cap Table 264

Cap Table CTO Option Pool Hiring 264

Gust

JUNE 22, 2016

The post Gust Launches Comprehensive Equity Management Platform for Cap Table Management and 409A Valuations appeared first on The Gust Blog. Gust News Starting Your Company 409A valuations cap table management equity managementGust announces acquisitions of Sharewave and Preferred Return; creates the most robust and affordable equity management solution for early-stage startups.

Cap Table 102

Cap Table Valuation Equity Management 102

ithacaVC

APRIL 25, 2014

I thought it might be useful to post up a model cap table ( Cap Table Model with Waterfall ). This cap table can be used by a pre-funded startup and then a financing can be layered in. They are simple, but critical to understanding how the cap table works and how valuable the cap table can be to your understanding of your stock holdings.

Cap Table 66

Cap Table Preferred Stock Pre-Money Valuation Liquidation Preference 66

Berkonomics

MARCH 7, 2019

The risk of the “dirty cap table”. Oh, I know. When you started the business, you took investments from friends and family in small amounts just to get you started. Of course, that worked at the time. Enter the need for larger investments.

Cap Table 73

Cap Table SEC Private Placement Accredited Investor 73

ithacaVC

DECEMBER 13, 2013

When raising money from investors (angels or VC), it is critical to have a presentable and clean cap table. On a fully diluted pre-money basis, that would mean the option pool represents 14.5% (356,758/2,456,758) of the cap table. QUESTION #1: This leads to our cap table clean up question #1, namely is that the right allocation? Too much convertible debt on your cap table is a pain in the butt to deal with as it will drive down your valuation.

Cap Table 58

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 58

Version One Ventures

MAY 22, 2018

How do you decide who you should have in your cap table? The post The “reverse” pitch: Who should you have on your cap table? When we think about pitches, most of the focus is on entrepreneurs pitching investors for capital. But VC can be competitive, particularly for interesting deals, and in many cases, the pitch meeting is a two-way street. Some of the best later-stage investors walk founders through an institutionalized “reverse” pitch.

Cap Table 60

Cap Table Syndicate Syndication Later Stage 60

VC Adventure

OCTOBER 8, 2012

This is typically reflected on cap tables in a completely separate tab to the spreadsheet that shows the debt total by investor and then some kind of interest calculation. Of course many entrepreneurs naturally focus on the main tab of their cap table spreadsheet that shows ownership by founder, investor, etc and for them this is the starting point of negotiating a round. This is especially true when the round price is significantly higher than the convert cap.

Cap Table 95

Cap Table Dilution Equity Deal Structure 95

ithacaVC

SEPTEMBER 4, 2011

Here is the latest edition of Finance Fridays from Brad Feld called “Introducing the Cap Table and CTO” Every startup needs someone to be in charge of the Cap Table. When I was General Counsel at a tech company during the 1999 bubble times, I kept the company’s Cap Table. And now as a VC, I keep the Cap Table for a few of the company’s for which I am a board member. should have its own tab on the Cap Table.

Cap Table 46

Cap Table CTO Finance Option Pool 46

VC Adventure

OCTOBER 8, 2012

This is typically reflected on cap tables in a completely separate tab to the spreadsheet that shows the debt total by investor and then some kind of interest calculation. Of course many entrepreneurs naturally focus on the main tab of their cap table spreadsheet that shows ownership by founder, investor, etc and for them this is the starting point of negotiating a round. This is especially true when the round price is significantly higher than the convert cap.

Cap Table 48

Cap Table Dilution Equity Deal Structure 48

Gust

OCTOBER 8, 2014

It is less about actual money and more about structure of your Cap Table. Invested Interests cap table venture capital Marc Andreessen kicked off another great debate on Twitter last night, one that I’ve been talking about incessantly in private circles for the past 2-3 years – what actually IS the definition of a seed vs. A-round. Cautionary note: No competent VC is actually fooled when you show up after raising $6M in seed financing and say you’re now raising an A!

Cap Table 140

Cap Table Silicon Valley Term Sheet Dilution 140

VC Cafe

JUNE 26, 2013

101 funding Soomla Yaniv Nizan cap table Eyeview VC Funding is never easy. Even when you hear stories about entrepreneurs who walk out of a VC with a personal check from the managing director, it is usually after 6 months of pitching and hearing ''no''.

Cap Table 129

Cap Table Management Entrepreneur 129

Scalable Startup

JANUARY 28, 2013

One of the top 3 to 5 worries when launching a startup is is “Who gets how much stock upon start or joining? Founders, Co-Founders, next employees, Investors, Etc. The founders of SmartAsset went through this process and decided to open it up to the world. These guys put together something very cool and it follows the “Give before you get” rule. They call it STARTUP ECONOMICS. Here it is… https://www.smartasset.com/infographic/startup.

Cap Table 21

Cap Table Stock Employee Early Stage 21

Hunter Walker

DECEMBER 24, 2018

I strongly believe the detailed story of the company’s success is the founders’ one to tell if they choose to do so, but at the risk of excessive inside baseball, I’ll share my perspectives from the cap table.

Cap Table 121

Cap Table Acquisition Seed Stage Vertical 121

Hunter Walker

MARCH 14, 2019

All the disruption can be pretty jarring to an entrepreneur, especially in situations where the exiting partner represents the top line on your cap table. And the rest of the cap table can come along or not with their pro rata. (A

Cap Table 116

Cap Table Dilution Silicon Valley Portfolio 116

OnlyOnce

NOVEMBER 2, 2017

I redacted our cap table and pictures of our VCs, but otherwise, feel free to use it with your own management team, or even your whole company.

Venture Capital 121

Venture Capital Cap Table Entrepreneur Startup 121

Gust

JANUARY 30, 2014

Viable business structure and cap table. Large and growing market. Real domain expertise. Provable product need. Scalable business model. Competitive advantage. Platform/partnership/bizd ev/API strategy. External validation (ideally traction and/or passionate customers). Reasonable valuation. Proven team (tech/product/design/mark eting/sales/domain/etc.). But most important of all , it must have an entrepreneur on whom I’m willing to bet.

Cap Table 121

Cap Table API Valuation Leadership 121

Version One Ventures

SEPTEMBER 20, 2018

One of the most important decisions for a founder of an early stage company is deciding who should be on the cap table. Other A funds look to invest in seed rounds as a way to get a seat at the table, in order to have more options for a later round. in order to have a seat at the table for the next round. That’s why it’s critical to understand a the fund’s underlying philosophy on seed: is it true ownership or just a seat at the table? .

Cap Table 251

Cap Table Due Diligence Early Stage Metrics 251

Hunter Walker

NOVEMBER 21, 2018

When they’re at seed stage, we’re deferring to the founders’ decisions but also trying to help them understand the challenges associated with a hard pivot if their cap table isn’t supportive of the direction.

Founder 112

Founder Cap Table Seed Stage Early Stage 112

Feld Thoughts

JULY 15, 2014

2) Keeping the number of entries on our cap table relatively small. We recently funded Blinkfire Analytics using our FG Angels Syndicate. The CEO and founder, Steve Olechowski , was co-founder / COO of FeedBurner, which Google acquired in 2007.

Syndicate 418

Syndicate Syndication Entrepreneur Cap Table 418

View from Seed

AUGUST 6, 2015

This is not an argument for circulating the entire cap table or compensation calendar.

Equity 308

Equity Employee Cap Table Salary 308

Feld Thoughts

AUGUST 28, 2015

Given the amount raised, the new financing, and the cap, I would have asked the seed investors to waive the terms and instead accept a smaller percentage of the company than they would have otherwise gotten. Yesterday, I got the docs giving the seed investors, which included the FG Angels group, 12% of the post money cap table. Six weeks ago I wrote a post titled The Silliness Of Recapping Seed Rounds.

Cap Table 309

Cap Table Dilution Seed Stage Angel Groups 309

Both Sides of the Table

MAY 19, 2018

Your historical trading information including financials and a “customer file” which shows the history of your transactions so that investors can run “cohort” analyses Customer reference, personal references, key team members, compensation, cap table, stock option plan, etc.

Cap Table 311

Cap Table Due Diligence IRR Forecast 311

Feld Thoughts

AUGUST 26, 2011

Next week we will introduce the Cap Table, and show how it changes when adding a co-founder. When we were last with our SayAhh cofounders, they had implemented an accounting system and Jane had contributed $50,000 for a 55/45% equity split.

Balance Sheet 367

Balance Sheet Equity Delaware Cap Table 367

Haystack

OCTOBER 7, 2018

Cap Table 157

Cap Table Portfolio Venture Capital Pay to Play 157

Hunter Walker

NOVEMBER 13, 2018

Early Stage Hybrid Buyout a la Wag, Brandless, DoorDash : Softbank becomes the largest investor on the cap table, sometimes clears out the Board, and, if reporting is correct, doesn’t broadly offer secondary to earlier investors.

IRR 117

IRR Cap Table IPO Early Stage 117

Hunter Walker

SEPTEMBER 24, 2017

This was a man who, despite agreeing to take the meeting, established within the first few minutes of their conversation that he wasn’t someone who was likely to end up on her cap table and even more importantly, probably someone she didn’t want there.

Founder 122

Founder Cap Table Conversion Operations 122

Scott Edward Walker

SEPTEMBER 16, 2017

Solid post for young founders=> Cap Tables, Share Structures, Valuations, Oh My! I’m using Twitter as a form of micro-blogging to share interesting articles, blog posts and video clips relating to startups, entrepreneurship and legal issues. Below are my four most popular tweets for the past month. Cheers, Scott. Top 4 Tweets. A Case Study of Early-Stage Funding [link]. Determination is the most important thing.”

Cap Table 43

Cap Table Valuation Early Stage Founder 43

Hunter Walker

JUNE 14, 2018

Who will hold the accountable to building something they’re proud of but remember we sit on the cap table, not the org chart. I live for that moment of flicker in an entrepreneur’s eye during a pitch discussion.

Cap Table 92

Cap Table Vertical Portfolio Reputation 92

Haystack

SEPTEMBER 16, 2018

I am only participating in structured rounds where I know the other 1-2 investors around the table. I can’t afford — workwise or simply emotionally — to have a CEO I work with getting advice from 25 people all the time, because I now know from investment experience what happens in those situations: The noise of the cap table drowns out the signal from reality.].

Cap Table 89

Cap Table Marketing Founder Early Stage 89

OnlyOnce

JULY 26, 2018

Or you negotiate the highest possible valuation from a new lead investor, only to discover that new lead investor, now on your Board, expects you to triple it in four years and is way out of alignment with the rest of your cap table.

Cap Table 73

Cap Table Lead Investor Valuation Reputation 73

Feld Thoughts

JULY 14, 2015

A company raises $1m of seed money from angels in a convertible note with a $6m cap. Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. It usually happens in a later round, when the company is in fact worth much less than the liquidation preference overhang and insiders use a pay-to-play and a low valuation to reset the preferences and the cap table.

Recapitalization 330

Recapitalization Cap Table Pre-Money Valuation Valuation 330

Feld Thoughts

JUNE 2, 2015

Or, if you just want the paragraph, it’s: “If this note converts at a price higher than the cap that you have been given you agree that in the conversion of the note into equity you agree to allow your stock to be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest.”. This can be especially confusing, and ambiguous, when there are multiple price caps.

Liquidation Preference 329

Liquidation Preference Cap Table Venture Capital Angel Investor 329

David Teten

MAY 20, 2016

As one of the lead engineers at ff Venture Capital , I spend most of my day building custom software solutions that enhance our firm’s process–tools that range from portfolio investment management to co-investor and cap table tracking and more.

Private Equity 124

Private Equity Equity Cap Table New York 124

Feld Thoughts

JULY 5, 2015

Dodgeball.com: But really…When a public company with a market cap of $64.1 Often this was built on top of the concept that the acquiree brought to the table, but the core product was rarely used. Then acquires started using the concept of acquihire to try to shift consideration away from the cap table and instead increase the amount of “retention consideration” going to the remaining employees, independent of the capitalization of the company.

Acquisition 317

Acquisition Cap Table Venture Capital Framework 317

Gust

NOVEMBER 15, 2012

But by far the biggest issue is that the very essence of public markets (and what makes them “public”) is that the SEC mandates an enormous amount of transparency, including complete quarterly financial statements, complete publication of the company’s cap table including all significant shareholders, and so forth.

Seed Stage 143

Seed Stage Equity Hockey Stick Cap Table 143

ithacaVC

APRIL 5, 2011

I am a huge fan of simple cap tables. A cap table is a written record (in Excel, for example) of who owns stock in your company. One rule of simple cap tables is to issue “normal” stock to founders (common stock only) and investors (typically preferred stock, but sometimes common stock to early friends and family). It lists every owner out by amount owned, type of stock (common or preferred), and date purchased.

Common Stock 43

Common Stock Stock Cap Table Preferred Stock 43

YoungUpstarts

OCTOBER 7, 2015

By Will Reynolds, CEO of SecureDocs. Starting a business does not have to be particularly expensive. Many companies are successfully bootstrapped from the outset and the list of major expenses fairly predictable, for example salaries and office rent.

Intellectual Property 194

Intellectual Property Cap Table Salary Bootstrapping 194

Both Sides of the Table

JULY 25, 2011

To this day I’m still surprised how few CEOs really understand the differences between 2x liquidation preference and a liquidation preference with a 2x cap. Or what “flat spots&# on a cap table are. This article originally ran on TechCrunch.

Liquidation Preference 346

Liquidation Preference Term Sheet Cap Table Redemption 346

View from Seed

OCTOBER 15, 2014

Examples of housekeeping include the following list, though not every item will appear every time: Finance: Cash out date, burn rate, 409A valuation, cap table, common/preferred stock dashboard.

Seed Stage 338

Seed Stage Cap Table Warrant Metrics 338

Haystack

JANUARY 14, 2019

3/ Carta Just Starting Out: One of the main opportunities for Carta (formerly eShares) is to pick up where CrunchBase left off, but more from the cap table as a starting point. When I moved back to the Bay Area in early 2011, the technology and startup sector didn’t feel as big or expansive as it does today.

Cap Table 105

Cap Table Stealth Private Equity Portfolio 105

Hippoland

APRIL 10, 2016

Secondly, even if you are ok with either arrangement you have proposed, it is a major red flag to investors to have much of the cap table locked up with dead-beat co-founders / professors / advisors who are not working day-to-day on the company. You will have tremendous difficulty raising money with this kind of cap table, and investors will make you restructure your cap table. Dear elizy : I started a company in school with two co-founders.

Vesting 76

Vesting Cap Table Equity Stock 76

Both Sides of the Table

AUGUST 2, 2014

The acquiring company wants 100% of the proceeds to go to founders whatever the cap table says because buyers care way more about incentivizing and locking in founders than they do about VC returns or legal provisions to protect VCs.

Cap Table 398

Cap Table Stock Acquisition Founder 398