Maintaining a Cap Table

Spartina loves to find great content, and not reinvent the wheel. So we are going to point you to a wonderfully clear article about cap tables, from Alaska InvestNet website. The article is sourced from the leading entrepreneur education side, the Ewing Kauffman Foundation. But first, to give you an idea of the subject, here are some pointers, gleaned from the article we are recommending.

First, a cap table becomes essential the moment you get investors. It is the way you keep track of the ownership of the company, the value of each investment, and will be used when you sell the company or when it goes public.

Second, it is not that complicated to maintain, if you understand the terms, and keep it up to date. The article we will point to you defines some basics such as

A: Pre-money valuation + investment = post-money valuation

B: Investment / share price = number of shares to investor(s)

C: Share price = pre-money valuation / number of existing shares

Finally, we invite you to start simple. The article gives the simplest scenario of several rounds of funding, and is quite easy to follow. They intentionally do not go to the next level of complexity, which is options or warrants, bonuses, vesting schedules, or conversions. When you are ready to deal with those, we’ll provide you with other references.

Happy reading.

Cap Tables Explained