It is an exciting venture to start a new company. The growth and success of your company involves many aspects and you being a good decision maker and strategist is part of the process of having a successful company. You also need to be a good planner in your organization to ensure that every activity carried out is goal oriented. Company cap table management is one way to ensure that you are running your organization effectively. Having enough funds to carry out all activities is another important factor. You can get funds from investors especially when your company is just starting. Having a capitalization table gives a clear depiction of ownership in the company and details concerning investors and founders of the company.
Introduction To The Cap Table
It is crucial that you should appreciate what the cap table entails because it is an important tool for any entrepreneur who values organization and smooth management processes. The cap table is a management tool and not just a representation of transactions done in the company. It helps to store legal documents, transactions, transfers, stock issuances and exercise of options among other important things. It is essential that you embrace the idea of a cap table because the amount of information is stores is endless. The information is usually vital to the company and may be required at various stages of growth and development. It is a record you can go back to at any point and get what you are looking for, at ease.
Importance Of Cap Table Management
The most obvious importance of Company cap table management is that the company gets to be organized. There are many things that happen in a company and without monitoring and keeping a record, there will be a whole lot of misunderstandings among the employees. Organization in a company is key to make sure that everything is kept in order. Cap table management helps the company to be organized in areas such as complying with regulations, recording transactions, signing legal documents, communicating with shareholders and drafting new documents.
A growing company is never short of complications of various kinds, some major and others minor. Most of the complications arise due to the developing complex capitalization structure that the business gets during growth. Your company can attain its highest potential by having great employees, great investors and great management.
Reasons Why You Need Cap Table Software
To Raise Money On Better Terms
Having a cap table software will aid you in raising money on better terms. You are aware that for your business to grow you need to have enough funds. One way to get this capital is through taking up different investments at different times. You can only grow positively and improve the company and the ownership of shareholders with the right resources. With a functioning and effective cap table, you will be able to carry out negotiations in your favor. Have a cap table that is up to date and organized. It should also be a curate to ensure that you get the best deal. The best time to set up a cap table for your company is right at the beginning when it is still a startup and then you will only have to update it as time goes by. Do not wait until you want to take up a new investment for you to start organizing the cap table, you will end up making many mistakes and making an inaccurate cap table because of the rush.
You need to keep a record of vested shares in the company. Being aware of what is happening in the company helps you to get a clear picture of what you are dealing with. For example, adoption holder may decide to leave the company before time and this is a change you should take note of, as their unvested options are given back to the company. Check on the purchases made in the company, any transfers and early exercises. Keeping track of all these transactions and changes will help you to manage your Company cap table easily.
Hiring Key Employees
Equity compensation acts as a great incentive to get you to hire and keep reliable employees in your company. If you are wondering how to attract talent and how to keep it in your company, equity compensation may be your way through. Come up with an attractive compensation package that will interest the employees you wish to work with. It is important to plan ahead of time. Always plan for what you think is important to a certain course. For example if you want to hire important employees you can ensure that all important information is ready even before they ask for it, for example executives usually ask about the amount of payment they will receive at different exit values in the event that the company is acquired. You should have all this information ready and all you do is deliver instead of searching for it the moment they need it. The good thing about having a cap table is that most of their questions have answers on the cap table, so make sure you have one that is up to date.