Venture Deals: Chapter 7: The Capitalization Table

Ask The VC

Even if you know what a cap table is, we’ll give you a simple way to calculate the summary level ownership categories with a calculator (or a simple spreadsheet model). . Now that we’ve worked through all of the specific clauses in the term sheet, let’s go through how a typical capitalization table (cap table) works. A term sheet will almost always contain a summary cap table, which we describe in this chapter.

Spreadsheets To Model Cap Tables

Ask The VC

However, there are plenty of resources for cap tables on the web. Venture Hacks: How To Make A Cap Table. Mark Suster: Venture Capital Valuation Spreadsheet. Sample Cap Table. StartupNetwork: Capitalization Table. ModelSheet: Capitalization Table. There are many others on the web – just search around for “cap table&# or “capitalization table&#. Fundraising cap table financing

Last Chance to Sign Up For The Fall 2017 Venture Deals Course

Feld Thoughts

Week 3 – Capitalization Tables/Convertible Debt. If you are interested in raising venture capital, I encourage you to sign up and take the course. Kauffman Fellows and Techstars are running another cycle of the Venture Deals course with me and Jason Mendelson. Signups close tomorrow as the course runs from 9/24/17 – 11/13/17. The course is free to everyone. The seven-week course, which is about five hours of work each week, has the following agenda.

7 Equity Crowdfunding Risks Feared By Many Investors

Startup Professionals Musings

Professional investors like to keep tight control of capitalization tables and all stock owners, to facilitate their own payoff when a sale, merger, or public stock offering is held.

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Startup Valuations: 7 Things to Look for in a Valuation Company

Early Growth Financial Services

You want a valuation firm that has experience with all types of valuation for companies like yours, including stock option management and complex capitalization tables. Valuation. You know you need one. Annually. What you may not know is that it really does matter who performs your valuation. There are a lot of valuation companies out there, so I know many entrepreneurs are tempted to just shop around until they find the lowest price, but this is a mistake.

Users Guide to Startup Advisors


Nobody should ever be on the capital table for what they did once in the past. What’s an advisor to a startup deal? Technically, advisor is one of those bucket terms that means anything and everything, depending on context.

8 Questions Before You Join Or Invest In A Startup

Startup Professionals Musings

Yet if you are on the other side of the table, there are some other key questions that you need to ask, which will tell you more about the real success prospects for this business. How complex is the capitalization table?

Validate The Pedigree Of A Startup Before You Jump

Startup Professionals Musings

Yet if you are on the other side of the table, there are some other key questions that you need to ask, which will tell you more about the real success prospects for this business. How complex is the capitalization table?

Shorter Flights at Lower Heights: The Right Way To Angel Invest


But most Angels will fail to get back the capital they've invested (let alone make money), and it's not because they don't pick good companies or back great entrepreneurs — it's because they're completely mistaken about an Angel's role in the investing cycle.

How to Pick the Right Attorney For Your Startup

Up and Running

We were targeting to raise around $3 million in investment capital. This should be clearly spelled out in your Capitalization Table , or “Cap Table” as it’s commonly called. Can they create and advise on a Capitalization Table?

Unintended Consequences: When SAFE and Convertible Notes Go Awry

Pascal's View

Many entrepreneurs lose track of what they have been cooking up in the cap table. The following scenarios represent typical recipes for trouble: Company X is early in business development, has a near-term need for capital to get through the next 3-6 months, and the management team has no understanding of how the equity should be divided up among its various constituencies (this includes option pools and what ownership stakes investors typically require at various development stages).

Book Short: I Wish This Existed 12 Years Ago


As Brad noted in his launch post , the book’s table of contents says a lot: The Players. The Capitalization Table. How Venture Capital Funds Work. Book Short: I Wish This Existed 12 Years Ago. Brad Feld has been on my board for over a decade now, and when he and his partner Jason Mendelson told me about a new book they were writing a bunch of months ago called Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist , I took note.

10 Steps to Success With Angel Investors

Business Plan Blog

A capitalization table showing the post-investment ownership structure of the business to include founders, option pool and investors in the current round. 10 Steps to Success With Angel Investors.

Introducing the Cap Table and Hiring the CTO

Feld Thoughts

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. Later, if they sell, the low tax basis and capital gains tax rates result in a lower tax liability than if they didn’t file the 83(b) election. 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.

Coming Soon: A Game Of Startup M&A Musical Chairs

Seed Stage Capital

Any startup that takes outside capital is obligated to generate an exit for their investors either through an IPO (extremely long odds), or through an acquisition (very long odds).

Web-Based Worthworm Helps Determine PMV For Startup Investment Purposes


“If you are an angel investor and a venture is seeking capital from you, insist on getting its Worthworm report.

2 Kinds of Start-ups That Get More Valuable Post-IPO

Inc Startups

A new analysis by a Silicon Valley venture capital firm identifies two tech business models that tend to stay strong. Silicon Valley VC Emergence Capital Partners recently looked at what happened to tech companies' valuations after going public.

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Startup Valuation: How Much Is Your Company Worth?

Seed Stage Capital

Part of my job description involves prepping startups to raise capital. Thus, it is logical that entrepreneurs want to approach the negotiating table with a bullet-proof spreadsheet detailing and supporting their valuation down to the last dollar.

Venture Capital Demystified: A Fundraising Guide for Entrepreneurs, Investors, and Lawyers


If a VC offers you a term sheet, expect their lawyers to ask you for more information like capitalization tables, contracts, material agreements, employment agreements, and board meeting minutes.

Valuing Startup Employee Options

David Teten

Enter Raul: This capital table startup options valuation model was created with the purpose of valuing options for an illiquid, early-stage start-up. Finally, financial assumptions such as capital structure and taxes had to be considered. Venture Capital

What Seed Funding Bubble?

Possible Insight

However, for a variety of reasons (anchoring on historical ownership, capitalization table management, and price equilibrium for the marginal startup), I doubt angels have radically changed the percentage of a company they try to own.

Startup Administrivia: Part 1 – getting started

Startup Musings

Making sense of Cap Tables. Cap Table construction: What is this? A cap (capitalization) table lists who owns what stock in the company. Where can I find examples of cap tables to learn more? Note: This multi-part post is for first time founders. Anyone who has done it before will already know all this. If you are a first time founder, what should you obsess about? Hopefully, you are all over the market opportunity.

Equity for Consultants – Keep it Simple!

I can tell you that, among other problems, any uncertainty in the capitalization table when the company is acquired will be resolved squarely and unequivocally in favor of the buyer. Cooley Report Reviews Second Quarter Venture Capital Financing Trends. Venture Capital.

How to Raise Startup Funding from Unlikely Angel Investors

Up and Running

According to the Angel Capital Association: Angels (private money) invest in 55,000 startups each year versus 1,500 companies by VC (venture capital) funding. However, entrepreneurs still need to approach angel investors offline for larger amounts of capital.

Getting Funded: Step 4, Due Diligence

Passionate Intensity

capitalization table (who owns what). If you plan on raising significant additional capital, you should make sure the fund has enough money reserved to at least have an option of following on to this investment.

How do you plan for M&A?

Will Price

Good records include: Articles of Incorporation/company charter all Board minutes, contracts, signed employee assignment of IP forms capitalization table option plan records prior financing documents audited financials patent filings documentation relating to litigation, assessments, or claims Any material gap in records will either 1) delay the sale process and/or 2) will lead to a higher escrow to offset potential liabilities that may "appear" post-close. Happy St. Patrick's Day.

IP 40

On the Road to Recap:

In Silicon Valley boardrooms, where “growth at all costs” had been the mantra for many years, people began to imagine a world where the cost of capital could rise dramatically, and profits could come back in vogue. About this same point in time, the journalists that focus specifically on the venture capital industry noted something quite profound. You can no longer simply look at the cap table and estimate your return. Competition also has access to capital.

Episode 8: Charlie’s Bcast Email, Startup Incubators, and 10 Reasons Why Startups Fail | The Bcast

Up and Running

They never worked with startups who needed to put together private placement memos for investors, capitalization tables and all of those things. Smart money should bring more to the table than just cha-ching in your bank account.

Key Lessons From Cryptine Network’s Failure*

Entrepreneurship Blog

It also became increasingly clear that while the consulting revenue had been supporting the software development, these were two separate businesses and that capital would be allocated more efficiently by separating them. We agreed that the goal was to create a capitalization table that allow Cryptine to be venture fundable but we couldn’t agree on exactly what the appropriate numbers were for founders who were leaving the company at such an early-stage.

New San Diego VC Firm Emerges as ‘The Moneyball of Venture Capital’ | Xconomy

New San Diego VC Firm Emerges as ‘The Moneyball of Venture Capital’. Here’s some big news for San Diego’s innovation economy: There’s a new venture capital firm in town—and its investment methodology represents a fundamentally different approach to the conventional business model for venture investing. As part of their decision, Correlation also tells startups up front how much capital will be reserved for follow-on investments—and the firm’s partners won’t take a board seat. “We

Nokia Startups Mistake #2 – The Freerider Issue


Here is my check list: I strongly recommend co-founders, prior to founding a company, sit down and engage in these profound what-do-I-bring-on-the-table series of discussions. Potential free riders are spotted and a capital table that is collectively perceived as fair is nailed down.

Getting Funded: Step 4, Due Diligence

Passionate Intensity

capitalization table (who owns what). If you plan on raising significant additional capital, you should make sure the fund has enough money reserved to at least have an option of following on to this investment. You made it through the partner meeting , your email dings, your phone rings — good news: the VCs liked your company enough to proceed to the next step: due diligence. Usually, the word will come from your “inside coach”, as explained in a prior post.

Startup Equity For Employees

Important disclaimer: Ive got experience negotiating stock compensation packages from both sides of the table. Owning the stock has a potentially significant tax advantage: it starts the timer for long-term capital gains. Any capital asset held for more than a year is taxed a low, long-term capital gains rate (currently 15% percent, maximum). Your 25,000 shares are now worth $250,000 and you only have to pay long-term capital gains tax when you sell.

Why is there such a large founder to early employee equity drop-off? - Quora

Update Link to Questions, Topics and People Add Find Questions, Topics or People Comment Rocky Kahn 1 vote by Marc Bodnick To a large degree compensation depends what one brings to the table. Quora Home About Login Sign Up Similar questions will display as you type.