Notes

Private Equity: 5 Areas in Which a Cap Table Modeling Can Help
Cap table modelling is a simple method that can be used to create multiple languages for use in accounting and financial reporting. A cap table is simply a spreadsheet that contains one column for each country represented on the world map. Each country is colour coded based on their Gross Domestic Product (GDP) in the region represented on the globe. With the click of a button, the spreadsheet can be turned into a dynamic map using multiple languages.

Most large and complex organizations will find it advantageous to use the services of a professional provider who can create customized charts and maps from scratch or from an existing database. The majority of these companies can also provide Cap table modelling services. These professionals have in-depth experience in the creation of both maps and reports. In many cases, they will be able to provide technical support as well as advice on the use of different tools and language extensions. Depending upon the organization's level of expertise, it may be necessary to outsource some or all of this work.

In start ups of the legal aspects of the industry, a Cap table management service can provide both general as well as specialized reports that can help ensure compliance with various laws across the board. Many companies rely upon internal and external reporting in order to ensure accurate reporting of information that can impact legal applications. For example, companies involved in the provision of shared ownership of intellectual property often rely upon accurate mapping in order to determine the ownership structure and associated tax liability. Similarly, organizations that are engaged in the registration of securities (stocks) and derivative instruments may require detailed reports in order to comply with applicable regulations and rules. Regardless of whether the organization is in the technology, finance or medical industries, a cap table management service can create reports that are compliant with local and international laws.

Another aspect of this type of modelling is to assist start-ups. When it comes to establishing a business in Canada, it can often be difficult for new businesses to get their feet wet in the country. In order to stimulate growth and help potential investors make wise investment decisions, it can often be beneficial to create a comprehensive cap table management solution. Such start ups can help organizations create accurate and reliable internal and external reporting that enables start-up personnel to make informed decisions. Moreover, start-up start ups may also benefit from the guidance offered by a Cap table.

The third area that a Cap table can benefit is that of international ventures. Canada is a wonderful place to do business. In fact, it is one of the most conducive environments in which to do business. However, there can be some difficulty in finding investors willing to invest in new ventures originating outside of Canada. In order to attract these investors and potential future partners, Canadian organizations need to develop marketing strategies that take advantage of their duality as a country that embraces change and growth simultaneously.

One such marketing strategy that a Cap table can help promote is the development of a digital share offerings. In start ups , many entrepreneurs have discovered that it can be advantageous to invest in a high numbers of small, low risk cap table securities. In turn, this has helped them to develop a diverse but concentrated equity portfolio. In this manner, the risk profile of each Canadian venture has been diversified and managed. This approach has also helped Canadian service companies in developing strategic equity plans that make use of several different types of financing sources, such as venture capital, equity loans and lease options.

The fourth area in which a Cap table can be of assistance is in the context of the procurement of capital for a new or ongoing venture. Canadian venture capital firms typically look to new companies with the promise of an aggressive growth strategy. In order to encourage such growth, Canadian investors look to companies that are able to demonstrate a history of success. In order to do so, they may prefer to provide start-up and maintenance funds in the form of cash awards on the basis of future performance. In short, a cap table can help provide the necessary financial framework for a company through the identification of its target markets and the procurement of necessary technology and human resources.

Finally, the fifth area in which a Cap table can be of assistance to an investor through its ability to provide the necessary support in the form of reporting and royalty payment. One of the fundamental principles of modern day private equity investment strategies relates to the creation of a reporting and royalty system that allows for the re-measurement of the value of equity. The ability to appropriately address an increase in the equity value is one of the most important benefits provided by a modern day Cap Table. As such, it is of great benefit to an active manager to be able to review the nature of their portfolio and to make the necessary royalty payments in a timely manner.
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