Carpenter Ayers posted an update 8 months, 3 weeks ago
A Startup Cap Table, also known as a capitalization table, is a spreadsheet used by start-ups and early stage ventures to identify the ownership structure of their business. The startup cap table details exactly who owns what, the amount each entity/individual owns and what percentage of the ownership is allocated to the equity they own. By calculating the values of these key factors, the business can estimate its current market value. This is vital information for funding investors since they need to know the value of their investment. As well, the numbers on the table will allow the new business owner to see at a glance if they are on track to meet their financial goals.
There are many uses for a startup cap table template, including in-house training for new employees, presentations at company meetings and annual employee stock sales meetings. In order to create an excel sheet that includes the necessary information, you will need to purchase a copy of one of two forms offered by online suppliers. These suppliers offer simple template designs that will allow you to quickly create a useful document.
When you are ready to create your startup cap table template, first determine the total number of shares that are owned by each individual or entity. You will need this number to determine the maximum amount of equity the LLC, partnership or corporation may have. Then determine the total number of shares that may be owned by each partner. If there are more partners, each will have a stake in the firm; however, each partner will only have a portion of the total number of shares. These are the startup cap table dimensions you will need.
Next, you must identify the investors that will own shares in the LLC or corporation. Add up the individual and corporate shares held by each partner. The investors should also be identified. This can be done using the shareholder database provided by the supplier or you can use Google to look up names of potential investors. Each partner should also be added to the cap table, and their ownership percentage should also be noted.
Now it is time to put all of the pieces together. The startup cap table template may have multiple tables per partner. You will simply create one for the founder and company, and then duplicate it for each other. The startup company should have their name at the top of the sheet, while all of their partners should have their name at the bottom.
After you have created your startup cap table, you will need to enter information about each partner. All of these values will be Confidence Level, Current Market Value, Expected Home Start, Market Aging, Long-Term Market Cap, and EPS surprises. The current market value should be determined by applying the adjusted funds line on your balance sheet. The current market value is simply the market price of your equity divided by your equity partners’ equity. The Expected Home Start value should be determined by multiplying your current market price by the weighted average cost of capital per unit you expect to get from your startup.
The third piece of information that you will need to enter into your template is the Business Plan. For many reasons, this is not the most important piece of information to include in your startup cap table. In general, the purpose of this section is to give your prospective investors an idea of what you are planning to do with the business. The Business Plan should tell investors what type of products or services you intend to offer, how you intend to make money, how you will obtain funding, and your strategy for marketing and growing your business. However, it should be noted that if you have an extensive business plan, your investors will likely want to see it as well.
To create a startup cap table, all that is needed is the name of the business, the name of the individual or team that will act as the managing team, and the value of each partner. Once you have these items, all that is left is a few tables to provide data for your Excel template. You can easily create a backup Excel file in a different format, such as CSV or HTML, so that your other spreadsheet software can import this file easily. If you choose to use the Excel template for your startup capital table, then your other spreadsheet software will be able to import this easily as well. Now, you will have an easy time creating startup equity calculations anytime that you want.