Notes

Use a Startup Cap Table Template to Make Equity Investment Planning Easy
A Startup Cap Table template is a financial sheet, usually used by early stage or start-up ventures, which outlines the ownership structure of that particular business. Usually, the startup cap table outlines who owns what, how much each entity/person owns and what their stake in the business is. It also shows, on a horizontal axis, their net worth, meaning, it shows the current value of all the holders of equity. This value can change for a number of reasons, the bottom line is that every holder of equity is important to the business, as he represents a percentage of the business. Without him there would be no capital, no work force and therefore no profits.

There are many reasons why the capitalization table template is needed. When you are planning the initial business financing, you need to have an accurate way of figuring out the amount of money you need to borrow and the percentage that has to be paid to the lenders. A startup cap table is an integral part of that process, because otherwise, there is a risk of not being able to get the necessary funding to launch your business. Also, when you are just starting out, you have little money to put down and thus the chance of losing everything that you have worked so hard to gain - that is, your shares in the business. Thus, start ups helps in the identification of risks and the calculation of appropriate amounts of funding needed to avoid such risks.

Now, back to the original question: why do we need a startup cap table template? First and foremost, it helps the founders understand the ownership structure better. While it may seem intuitively obvious, in reality, many founders fail to properly explain the total number of shares that they possess in the business to potential investors or venture capitalists.

That's where the template comes in handy. The Startup Capitalization Table tells readers exactly the same thing as they would if they were explaining it themselves - what is the ownership stake. It lists the stocks held by each share holder. However, it also provides key elements that entrepreneurs might find useful to include in their presentation, such as the percentages of ownership that are allotted to each post-money investors and how much of a stake each post-money shareholder should have.

A startup cap table is extremely useful for entrepreneurs who lack business planning skills. When creating your own business plan, you can refer to this to help you draw up a "seed portfolio" of potential investors. In fact, many startups make their money this way, by seeking out new angel investors to fund their business. This method takes more skill than simply listing numbers of investors.

It is also useful to use a startup cap table template because it makes the sale of equity much easier. Often, when dealing with a traditional real estate investment, an investor may suggest several possible investors, depending on his or her own experience. By making a list of potential angels and venture capitalists, a startup investor can cut down the possibilities significantly. However, by filling out a startup capitalization table, it is possible to present each potential investor with a clearly defined ownership structure, making it far easier to sell a stake to that particular individual.

Startup investors often have more capital for the purposes of funding a business than the founders. The best way to raise capital is often through stock options or preferred stocks. Many companies have capital requirements for initial public offerings (IPOs). With startup cap table templates, you can include information about the shares the company will issue as options or as preferred stocks, thus allowing you to give more detail to your equity ownership post-purchase.

With a startup cap table template, you can help potential investors focus their attention on a particular company's shares. You can also help them develop a basic level of understanding about the industry in which that particular company operates. A good cap table can go a long way towards making sure the investors you reach have the information they need to make informed decisions. All in all, a well-designed cap table can help you build relationships with key shareholders and increase the liquidity of your investment capital, at the same time.
Read More: https://community.windy.com/user/trevinocrawford01