How Cap Tables can Help Your Business

The world of entrepreneurship is an exciting one to be living in! There’s nothing more life-giving them working on your business and watching it grow and flourish for the entrepreneur.

However, the driving passion behind creating a business and helping to make it successful is the reason behind long sleepless nights, pinching pennies to make ends meet, and tirelessly working.

As you continue working, you will experience a new and exciting season of growth, and with that growth will come unique needs. Old tools used to help your business may not be as effective anymore. New development may require new skills, tools, and technology to keep your business moving forward. All of this is a good thing to experience and a deeply satisfying part of stewarding a business well.

One such tool that many businesses have benefited from is cap tables. This table holds essential data on several aspects of your business’s growth and maintenance. Both internally, a cap table can be used for audits and budgeting, and externally it can be viewed by both potential and current investors.

So let’s get into the details of what a cap table is and why you should care about it.

What is a Cap Table?

A cap table is essentially a table that holds data that sheds insight into a companies equity and ownership. These tables show essential information for financial decisions involving market capitalization, equity ownership, and even market value.

One of the most powerful things that a capitalization table does for a private company is that it helps to maintain a current calculation of their running market value. This is a critical insight and allows for peace of mind when making financial decisions. These tables also provide information that is important for shareholder reports and auditing.

Keeping Track and Reporting

When it comes to running a business, especially if you are founding one for the first time or are in the early stages of a new venture, it’s easy to get lost in the ‘why’ of all your effort. However, as an entrepreneur, the purpose behind all the work and fire that keeps the passion going is one of the most critical aspects of your day-to-day life.

It’s not uncommon to get so caught up in the passion of running your business that specific tasks can become challenging. For instance, taking a step back and maintaining clean and orderly records or being sure always to have best practices can all take a back seat to the reason you started your business.

A cap table offers a way of maintaining important information through the founding stages of your business, and that will help you track important data. For example, information like owner equity is vitally essential for the market value of your company, and using a capitalization table helps give that information a place to live and be maintained.

Helping Influence Important Company Decisions

This list of data will show exactly who the owners are and what that looks like. It also lists securities such as stock and warrants. Having a running table that shows the current number of authorized, outstanding, and reserved shares is a powerful tool.

A capitalization table can also help to impact important employee-related decisions. For instance, giving your employees stock incentives is a great way to foster a strong culture of buy-in and ensure that your employees work hard to grow the company’s worth. In addition, having a cap table for any business, but especially for the recent start-up, can give you clear insight into what stock you have authorized or on reserve.

Get the Help You Need

SUP can provide your business at any stage with a powerful cap table tool that will help to guide your financial decisions and lead you toward success. With three versions focusing on post-money, traditional, and Y combinator stake, you can focus on every part of your company whenever you need to make an important decision.

Not only that, but SUP cap tables provide accurate calculations that track your equity ownership, so you know in real-time where and with whom your company’s equity is.

Not only that but using a polished system that’s been proven to work will help to impress your founders and give them the information they need to keep your company moving forward. So whether you are just starting or are in the founding stages, learning how to properly invest in a tool like a cap table will have powerful benefits for your company.

Published December 22nd, 2021