Board Effect

MAY 10, 2019

Capitalization tables—”cap tables” for those who don’t have time for extra syllables—map the balance of power in a company. If org charts are about people power , cap tables are about money power. In reality, however, cap tables are often far more complex. Let’s dive deeper into understanding cap tables; what they are, why (and to whom) they matter, and how they’re used. What is a cap table? Why do cap tables matter?

Cap Table 40

Cap Table Dilution Liquidation Preference Equity 40

Board Effect

MAY 13, 2019

Let’s not waste time listing everything startups could be doing to more effectively manage their cap tables. When it comes to cap table management in startup companies, it’s unrealistic to expect perfection. What does your cap table need to address at each stage of growth? The realistic demands of cap table management will increase as your business grows and matures—that much is a no-brainer. Defining Cap Tables.

Cap Table 40

Cap Table Dilution Liquidity Event Equity 40

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 111

Cap Table Down Round Liquidation Preference Founder 111

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

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 122

Cap Table CTO Option Pool Hiring 122

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

Berkonomics

FEBRUARY 27, 2020

How it happens. When you seek professional investors, whether organized angels or venture capitalists, one of the early questions you are asked is “How have you financed the business so far?” Investors love to see entrepreneurs who have used their own money to ignite their businesses. But often, entrepreneurs turn to others for initial capital. Describing that capital using the phrase “friends, family and fools,” or “FFF,” has become as common as to be trite.

Cap Table 48

Cap Table SEC Private Placement Accredited Investor 48

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 72

Cap Table Valuation Equity Early Stage 72

Berkonomics

MARCH 8, 2012

When you seek professional investors, whether organized angels or venture capitalists, one of the early questions you are asked is “How have you financed the business so far?” Investors love to see entrepreneurs who have used their own money to ignite their businesses. But often, entrepreneurs turn to others for initial capital. Describing that capital using the phrase “friends, family and fools,” or “FFF,” has become as common as to be trite.

Cap Table 65

Cap Table SEC Private Placement Accredited Investor 65

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

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''. This is the story by Yaniv Nizan from Soomla, who raised a round from 7 investors and lived to tell the tale. [[ This is a content summary only. Visit my website for full links, other content, and more! ]].

Cap Table 95

Cap Table Management Entrepreneur 95

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 95

Cap Table Silicon Valley Dilution Term Sheet 95

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. Aligned Cap Tables Are a Godsend: Especially when the founders are considering an early acquisition, aligned cap tables are a godsend.

Cap Table 102

Cap Table Acquisition Seed Stage Vertical 102

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. A couple of months ago, I was doing an internal lunch & learn for senior managers, and the topic came up as to “how do our VC firms work?”

Venture Capital 93

Venture Capital Cap Table Entrepreneur Startup 93

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 281

Cap Table Due Diligence Early Stage Metrics 281

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. After that, there’s often enough people around the table to manage the loss/transition of a GP/Board Member (even if it sucks). You’ll often need the support – both structurally and symbolically – of some other investors on the cap table to make the case for some of the ideas below to work.

Cap Table 101

Cap Table Dilution Silicon Valley Portfolio 101

Hunter Walker

JULY 20, 2019

When I’m on the cap table I can help a founder navigate this to try and avoid going the distance with a potential investor. While this hasn’t happened to any of our portfolio CEOs in a while, there’s one reason for a VC passing on a funding round that just sets me off: “I wanted to do the deal but couldn’t convince my partners.” ” This isn’t an explanation, it’s an excuse. Photo by Andre Guerra on Unsplash.

Cap Table 95

Cap Table Partner Vertical Portfolio 95

Version One Ventures

DECEMBER 3, 2019

Carta went on to become the standard for cap table management and is a unicorn many times over. . Bessemer started the idea of the “anti-portfolio” – the companies that you passed on, but ended up doing very, very well. . After Honey was acquired by PayPal for $4B a few weeks ago, we thought it was a good time to share the Version One anti-portfolio: Honey. We had a chance to invest in a $500K round at a $12M valuation in 2015.

Portfolio 114

Portfolio Cap Table Valuation Early Stage 114

Feld Thoughts

APRIL 16, 2019

Hunter has a great lead in: “ Here’s where I think founders and cap tables should be more proactive. There are some blog posts that every entrepreneur should read. Hunter Walk at Homebrew recently wrote one of them. It’s titled Oh S**t, Your VC Just Quit Her Fund! What a Good CEO Should Do Next. He covers three cases: Bullish aka You Are Absolutely Killing It Written You Off Too Early To Tell – Some Good Stuff, Some Challenges But A Lot To Do.

Cap Table 76

Cap Table Founder Conversion Email 76

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. Fred Wilson’s ‘ Pivot or Fail ‘ post earlier this week was especially timely for me.

Founder 103

Founder Cap Table Seed Stage Early Stage 103

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

This is going to be BIG.

MAY 20, 2019

On the other hand, some people try and pad the cap table with a bunch of big names or industry vets, even if their check size is small, just to build the network. Maybe it’s an e-mail or maybe it’s just a quarterly phone call that everyone on the cap table can dial-in to. Small investors are people, too—and there’s no upside to having a bunch of your cap table feel negatively in any way about the company.

Cap Table 89

Cap Table Later Stage Hiring Founder 89

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. It’s in a founder’s natural disposition to want to convince people of their point of view.

Founder 105

Founder Cap Table Conversion Operations 105

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

View from Seed

SEPTEMBER 23, 2019

To provide relevant perspective, listing past convertible note(s) and/or equity financing(s) including total round size and valuation (caps) is helpful. Previous venture firms’ specific involvement on the cap table should be noted here, though. *This post is part of our “pitch deck” series where we dissect the seed stage pitch deck and discuss the ideal flow for a pitch. You can read the rest of the posts in the series by clicking here *.

Cap Table 180

Cap Table Valuation Dilution Seed Stage 180

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 82

Cap Table API Valuation Leadership 82

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. Can you please send us your certificate of incorporation, your Cap Table, your 3-year P&L and last year’s historical trading information? Why you should never have a data room?—?the

Cap Table 221

Cap Table Due Diligence IRR Forecast 221

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 93

Cap Table Marketing Founder Early Stage 93

View from Seed

AUGUST 6, 2015

This is not an argument for circulating the entire cap table or compensation calendar. When someone goes to work for a larger corporation or public company, the compensation package generally includes an annual salary, a performance bonus or commission plan, 401(k), and health insurance.

Equity 237

Equity Employee Cap Table Salary 237

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. “Venture Industry Advocacy” – Ears to the market, help with the next fundraise, assist with optimizing the rest of the cap table – before and after closing, generally the “be a translator and facilitator between us and the capital markets.”

Cap Table 88

Cap Table Vertical Portfolio Reputation 88

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. Oh boy, conference season in the venture world and one enduring question this year has been “What to do about the Vision Fund?”

IRR 101

IRR Cap Table IPO Early Stage 101

This is going to be BIG.

MAY 13, 2019

I have a portfolio where 50% of the investments have founders that come from diverse backgrounds—and yes, I want them to get money from all of the still-active funds on Uber’s cap table that benefitted from the IPO. So, the extent to which any one fund will call out the other funds on the cap table that sat quietly on the sidelines for three years after Sarah Lacy called the company out in 2014 is going to be somewhat limited.

Cap Table 104

Cap Table Portfolio IPO Reputation 104

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

Haystack

DECEMBER 17, 2019

Recently this year, not only did the word-of-mouth for Superhuman noticeably increase (the company has been crafty at getting tech/social influencers on its cap table), I began to hear droves of employees at larger companies located far away from the Bay Area’s echo chamber say that switching over to Superhuman provided them with leverage and time back.

Cap Table 95

Cap Table Database Software Finance 95

View from Seed

JANUARY 15, 2020

Consider the interests of everyone on the cap table. One of the fun books I read last year was “Paper Tiger” by Tom Coyne. I love to play golf, and Tom did what many golfers dream about – he devoted 100% of his life for 2 years to get as good as he possibly can and tried to make it on a pro tour. The book is a light-hearted, enjoyable read. But one thing that stuck out to me was his description of playing in mini-tour events in Florida.

Cap Table 146

Cap Table Florida Founder Portfolio 146

Haystack

OCTOBER 7, 2018

Many of the most storied brands in venture capital made their name by being the investor of record in a specific company’s “Series A” round — largely thought of as the round after friends, after family, and more recently, after seed, where the new investor would lead the round, set terms, join the board, reserve capital, and make a long-term commitment to the company.

Cap Table 118

Cap Table Portfolio Pay to Play Government 118

Haystack

OCTOBER 2, 2019

Maybe an accelerator should take lower cap table ownership unless they deliver investors who convert? Those of us in the early-stage tech ecosystem by now well know that saying “there are a LOT of seed and new startups” is a gross understatement. It feels like a tsunami of deal flow , and for me, I’ve outlined how I pay attention to inbound flow in terms of what gets priority.

Deal Flow 90

Deal Flow Cap Table Early Stage Incubator 90

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. Totem is a tool that centralizes all the data about our companies’ management, metrics, investment history, co-investors and cap table tracking.

Private Equity 95

Private Equity Equity Cap Table LP 95

Both Sides of the Table

FEBRUARY 15, 2016

If on the other hand we have committed $10 million and if you don’t have 3 other investors around the table and if you’re burning $800k / month (implying you need $10 million more to fund one-year’s operations or nearly $15 million to fund 18 months) – we’re simply “ over our skis ” in order to help you because we wouldn’t put $25 million in one company at our size fund. How Complicated is Your Cap Table?

Burn Rate 226

Burn Rate Cap Table Valuation Pre-Money Valuation 226