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Cap Table Management Tips

Cap tables are important because they tell you who owns how much of your company, which can affect everything from how you price future fundraising rounds to the dilution of your ownership percentage to who needs to sign off on major company decisions. Accurate cap tables also play a major role in due diligence for potential investors or venture capitalists who are considering investing in your startup.

Here are some tips for managing a cap table:

Understand the basics: Familiarize yourself with the basic elements and formats of a cap table, including the different types of stock and ownership in the company, and how to represent your capitalization table on a spreadsheet or using software.

Keep it up-to-date: Ensure that the cap table has to be up to date all the time. This means updating any changes such as bringing in new shareholders, transfer of shares between shareholders, stock option exercises, repurchase (buying back shares) of shares from the company, and other transactions.

Use consistent names: If your cap table lives in a spreadsheet, you have to be diligent about using consistent names, updating your version whenever something happens, and sending the updated version to relevant stakeholders, like your investors.

Model different scenarios: To understand how a potential financing round will affect the cap table, it is important to model different scenarios.

Automate the process: As your company grows, the information becomes more complex and you need better, automated systems in place. Consider using a cap table software that can do it all for you, no matter how big your company is

Comply with regulations: To make sure the information on your cap table remains accurate and verifiable, you may need to comply with various regulations, such as ISO $100,000 limits and IRC 409A regulations.

By following these tips, you can manage your cap table effectively and ensure that it remains accurate and up-to-date.


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