- VENTURE CAPITAL FUND MODEL EXCEL HOW TO
- VENTURE CAPITAL FUND MODEL EXCEL UPDATE
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The company already has 100,000 outstanding shares (50% held by the founder and 50% held by an angel investor). Assume a VC is asking for 10% of a company with an investment of $1 million (valued at $10M). VENTURE CAPITAL FUND MODEL EXCEL UPDATE
Let’s look at the calculations required to update the cap table with an example: Capitalization Table Math Example Modeling ExerciseĪt its simplest, the equity ownership on a VC capitalization table should add up to 100%.Īs events occur, such as new investors are added or debt converts to equity, the number of shares on the cap table must be updated to reflect any changes while still totaling 100%.
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Use the form below to download a complete capitalization table example: Capitalization Table Model – Excel Template The VC cap table becomes obsolete after the company changes ownership, either via purchase or IPO.
Performing an analysis of expected returns and proceeds to various providers of capital based on certain exit valuation assumptions. Building 409A valuations and identifying any unallocated options available for new employee hiring. Conducting due diligence by new investors or potential acquirers. Performing an ownership scenario analysis by existing investors of a contemplated next round of investment at various pre-money valuations. In addition to showing current equity ownership, a capitalization table is useful for the following: Why the Capitalization Table is Important for Startups? There can also be unallocated options on a cap table, which will be allocated as key employees are hired in the future. Should the employee leave the company, her unvested options are forfeited and do not go with her. The date of investment can also be included.Ī typical cap table shows all shares on a fully diluted basis, which means all shares are accounted for, even if they have not been granted or earned yet.Ĭase in point is a new employee that shows 5% ownership in options that have been granted on her hire date, even though she will not receive the options until they vest, at 25% per year. On a standard cap table, the individual or firm name is listed in one column, followed by their shares in the second column, and then their ownership percentage will be recorded in the last column. A cap table may also rank all stakeholders by ownership percentage, generally from largest to smallest. The founder’s stake of 60% is now worth $12M despite the dilution (i.e., from 100% down to 60%)Īs a general convention, VC cap tables group similar parties together.įor example, a cap table can show the company’s founders and key employees first, followed by venture investors, and then angel or minority investors such as family and friends. The next round values the company at $20M, but the new investors want to own 40%. The founder owns 100% of a company worth $5M. VC cap tables can also be updated as investors exit the company and/or employees leave the company, however, most changes on the cap table are dilutive, meaning the equity ownership percentage of each entity will decrease as more investors join the company.Īs long as the company’s valuation is increasing (known as an “up round”), dilution is acceptable, as shown in the following example: Employee option grants and warrants (either allocated or unallocated). New investors and/or classes of securities (e.g. The capitalization table is updated after each investment round, as designated by the term sheet.Ī few of the key items that change on the cap table after a new funding round include: VENTURE CAPITAL FUND MODEL EXCEL SOFTWARE
While cap table software programs are available, most cap tables are still tracked in an Excel spreadsheet similar to the one shown above. liquidation event such as a sale to a strategic or IPO). Thus, all stakeholders can accurately calculate their share of the proceeds in a potential exit (i.e. But as the company’s employee base grows and more outside investors join in, it can quickly become more complicated.įor this reason, a cap table must be used and kept up-to-date to calculate the dilutive impact from each funding round, employee stock options, and issuances of new securities.
The VC cap table for a start-up can start off quite simple at first, initially including just the founders and/or the first handful of employees.
To begin, a VC cap table tracks the equity ownership of a company in terms of the number and type of shares (as well as series) along with any special terms such as liquidation preferences or protection clauses. Since this article will assume an understanding of basic VC terminology, we recommend reading that article before going through this one.
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How to Create a Capitalization Table?įrom a high level, a VC capitalization table serves as an extension of the VC term sheet by tracking the impact on the ownership structure of a company. equity ownership) in a startup or venture-backed business.
The Capitalization Table is tracked by venture capital (VC) firms to provide a summary of the current capitalization (i.e.
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