With the growing popularity of crowdfunding, startup investing and angel investment, more people are becoming involved in owning shares of companies. As a result, it’s important for entrepreneurs to know how to manage their cap table. This blog post will discuss tips that you can use to improve your cap table management skills!
Understand the Basics of How a Cap Table Works
A cap table is a spreadsheet that shows what percentage of ownership each stakeholder has in the company. This includes founders, employees, investors and even advisors. Understanding how these pieces fit together can help you make decisions about who to include in your round. You’ll want to know if there are any restrictions on voting rights or transferring percentages from one stakeholder to another.
Know Who Your Shareholders Are
It’s important to know who your shareholders are. What percentage of the company do they own? How much equity has been diluted in each round? And what rights come with their ownership stake, such as voting or liquidation preferences?
These are just a few questions that you should be asking yourself when determining how to structure your cap table and how to set up your shareholder agreements.
Use Voting Rights to Protect Your Company’s Interests
It’s important to know how the voting rights work when it comes to your company. If you want a say in who is on your board of directors, for example, make sure that there are enough shares available so that all founders can have their voices heard.
Keep a List of All Current Shareholders and Their Percentage Ownership
You should always keep a list of the shareholders and their percentage ownership, especially after each round. You might want to start by creating one with all your founders on it, add in any investors who have contributed funds (including yourself) or provide services like recruiting or legal advice at company expense, then fill out the percentages for everyone else as rounds go by.
If you’re interested in using software for your cap table management visit EquityTrack at https://www.equitytrack.co/.
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