Easily assign share allocations to the right investor, and then drill down at any time to track and manage information about them. A cap table is designed to show the equity capitalization for a company. Cap tables are most commonly used by startups and early-stage businesses but all types of companies may use https://quickbooks-payroll.org/ them. In general, the cap table is an intricate breakdown of a company’s shareholders’ equity including common equity shares, preferred equity shares, warrants, and convertible equity. It indicates each investor’s percentage of ownership in the company, the value of their securities, and dilution over time.

Furthermore, there is an implied expectation that founders have one and know how to do them. But the moment you start talking to investors you will very quickly realize that the only thing investors care about is how much they own. CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path. For more resources, check out our business templates library to download numerous free Excel modeling, PowerPoint presentations, and Word document templates.

Seraf Toolbox: Capitalization Tables with Waterfall Analysis

When it's time for a new funding round, confusion over the equity stakes leads to disagreements and legal disputes, stalling the growth of the company. But the spreadsheets have their limitations as well, which are being bridged by sophisticated equity management software in the market. This capitalization table (cap table) template is a helpful tool for a startup company or early-stage venture to list all the company’s securities. In most countries, such as the United States, cap tables are used as a formal legal record of equity ownership.

• Back then, they didn't have fancy spreadsheet templates or even calculators.
• In a multitude of parallel realities, Alex's company will experience various outcomes based on how they manage their company's equity.
• This makes it easy to manage equity distribution and ensures that the startup maintains accurate and up-to-date records of its share ownership.
• The pre-money valuation simply refers to the value of the company before the financing round.
• At a high level, here are the key facts about the company today, along with a few assumptions we will make about the future of the company.

Furthermore, it will be very high relative to the discount rates you’re used to seeing in mature public companies while performing DCF analysis (i.e. to compensate the investors for the risk). When the company decides to sell the business to another company, the proceeds from the sale are divided among shareholders. The cap table outlines how much each shareholder gets from the proceeds and in what order. An updated cap table helps eliminate any disagreements and lawsuits that may arise from the proceeds distribution. On a standard cap table, the individual or firm name is listed in one column, followed by their shares in the second column, and then their ownership percentage will be recorded in the last column. The capitalization table is updated after each investment round, as designated by the term sheet.

Ultimate startup cap table example and return analysis template (UPDATED!)

The Cap Table Excel is an essential tool for any startup that aims to manage its equity distribution effectively. The tool provides numerous benefits that make it easy to manage equity distribution, employee stock options, and common stock allocation. With Capitalization Table VC Example + Excel Template the Cap Table Excel, startups can focus on growing their business while the tool takes care of equity management. This capitalization table (cap table) template includes an integrated database of shareholders, both institutional investors and employees.

Even though it feels to the entrepreneur that our respective valuations are miles apart, the reality is about half the difference in the end. A co-sale agreement provides a group of shareholders the right to sell their shares when another group does so (and under the same conditions). The investor and entrepreneur have different objectives that will play out in any term sheet negotiation. The VC term sheet is a non-binding legal document that forms the basis of more enduring and legally binding documents, such as the Stock Purchase Agreement and Voting Agreement. The term sheet is short, usually less than 10 pages, and is prepared by the investor.