The use of a well-constructed Cap Table, is becoming the center of the conversation as more startups are growing in size, joining the exclusive unicorn club, and even reaching an Exit or liquidation.
This is why it is often given to a professional to handle such as a lawyer, or an outsourced CFO. To the surprise of many, it can be managed through an automated SaaS and give more information than its old spreadsheet version. If you recently made the transformation or didn’t made the move yet, this article will summarize everything you should be able to do with this new cap table management tool.
*important disclaimer: We are altshare, we offer a cap table management SaaS that has all the features shown here. that being said - this article is solely informative. We truly believe the future of cap table management should leave the Office (or Excel to be precise) and move to the digital future.
Up until now, the cap table needed constant attendance, information regarding everyone’s shares could be extracted but it took an expert’s hard work in order to do so. Furthermore, most spreadsheet cap tables do not take into consideration the contractual rights and obligations of every investor, so the information that could be extracted was never complete.
The automated cap table only asks you to list the information once, then it will keep track of the company’s ownership distribution, giving you access to the information 24/7. What does it mean? That you can have a firm grip of all company’s equity information at all times, and take calculated steps while you know exactly where you stand now and where you’re headed.
The cap table in its old format used to hold a lot of information, relevant to creating many important reports - such as the Stock-Based Compensation report, the required 409A report for US-based employees, and many more. In spite of being a major information carrier, this format of cap table was far from a data pool and felt more like the data deep shark-infested sea. Yet again, in order to extract this information, you needed an expert, and even so, it took weeks for the best of their field.
With the aid of the automated cap table, your reports can be issued with a click of a button. As every funder knows, there is nothing worse than letting important matters aside as you dwell on these small pesky inescapable things. Issuing important forms quickly and seamlessly, with a click of a finger, reduces the amount of effort invested on daily basis.
We thought about calling this section “into the multiverse” but this concept is already taken. Though it is extremely accurate when it comes to visualizing any possible (or impossible) scenario for the company, and seeing what it actually means. The feature we are talking about is the Scenario Modeling tool, asking “what if” and getting a simple and direct answer.
What scenarios should you run exactly? It’s completely up to you, let’s say you are just getting ready to do your seed round. A major investor has opened his schedule for you but not his wallet (yet), you already gathered some money through an FFF round but it’s merely enough to get things going. While getting ready for this life-changing meeting, it’s time you run some scenarios, input a Funding scenario to all kinds of investments that might result in this meeting. Now you can understand - what will be the expected company’s value, what should be the expected dilution for each stock owner, and what other investors’ privileges will be set to motion (such as a SAFE conversion into stock for example).
This scenario creation was technically possible via spreadsheet cap table but it was almost never put to use. The reason is that it took weeks to gather and calculate the needed information in order to create a single scenario, consisting of many variations such as: company value, actual investment, current investor’s privileges, and the new ones. So creating funding scenarios that will cover all possible outcomes was considered to be impossible, which might be the most significant effect of the transformation to the automated digital cap table.
The shift from a spreadsheet-based cap table to a digital automated one is a game-changer, not only in the field of equity management and recording, but also with the creation of many reports, and most importantly a scenarios input for any future change in the company, as complicated or far ahead as it is. Two people with a laptop, currently starting their startup can now seamlessly, freely, imagine how will their company look in the far future, right before an investment, or at their final destination - an exit.
altshare is a leading, fast-growing Equity Management & Compensation Plans Administration solutions provider. We love challenges. We are obsessed with our clients. We are on a mission to redefine the way founders do equity. All our products & services are supported through the altshare Platform - the only equity management platform built for entrepreneurs.