A startup cap table template can be an invaluable tool when setting up a new business. This is where investors’ names are written down on a sheet of paper with their personal stake in the business. It shows the difference between their initial investment (many thousands of dollars) and the current market value (many millions). It is also a guide to help potential investors make their money work for them. The Startup Cap Table Template is a simple yet very effective method of determining the equity that one can have in a new business.

Startup cap tables are important tools in the startup investment process. A pre-capitalization cap table helps determine the equity management strategies that should be used when a company is new and still developing its business plan. These shareholders are usually the first investors in the business.

When a startup is newly established, the early founders of the business are issued limited liability company shares that initially represent how much of the business they already own. Over time, as the business grows and begins to attract more customers, these investors begin purchasing common shares in the business as well. The pre-money valuation of these shares represents the value of their initial investments. The valuation helps determine if new investments are necessary, as well as whether the investors will need to obtain financing to fund future projects.

A pre-investment Cap Table is different from a post-money valuation in that the value is not based on the initial investment amount. Instead, it only considers potential investors. Because startup companies do not typically have debt, there is very little risk for the early shareholders. Because the value of these shares represents their future profits, potential new investors must bid on them and agree to the purchase of those shares at a specific price.

A pre Investing Cap Table template includes an authorized shares list that shows the current and historical share holdings of each of the investors that are members of that entity. The list shows the current and future worth of each share and the effect that current and future profits of those shares will have on the value of a company grows. It also shows the cost per share to the investor with regard to their initial investment. All transactions that are related to the purchase and sale of authorized shares are included in this type of template.

This template is ideal for those who are just getting started with a business and have not decided what type of business they will focus on once it is up and running. In this early stage, it is often difficult to make the right decisions. However, with this cap table, new owners can see their options from a variety of equity types at a very easy to read chart. Owners can get an idea of how much money they would like to raise for their business and how that money will affect the potential return on their new investments.

One reason why companies often use startup cap tables is to provide information to employees about how their earnings are being divided up among the owners of the business. Startup companies usually only have a few employees when they first start up. As the business grows, more employees are added and each employee is then paid a share of ownership in the business. In many cases, these employees have the option to purchase shares of stock from the owners in order to be compensated for their time.

When looking to hire a company to help you create this startup cap table, it is important to find one that is experienced and understands the benefits of an equity ownership structure as well as how it works with the capital markets. There are many templates available online for you to download and use. It is important to review the various options and provide accurate information when you are filling out the forms. The template you choose should include the information you have requested such as the dollar amount of equity owned, the cost per share you would like to sell, and the date your capital begins to accrue. By using a cap table designed for startup companies, you can ensure your financing structure gives you the tools you need to quickly move forward with your business plan.