How to mobilise your cap table

As a startup, getting investment is key. After all, it takes more than a winning idea to grow a successful business. Unless you plan to fund your startup yourself.

But an investor can add value in more ways than one, not just financially. Who appears on your cap table matters just as much as the money. Speaking of...

What is a cap table?

A cap table, or capitalisation table, outlines who has a slice of the pie (the shareholders) and how large that slice is. And by pie, we mean ownership in the company. 

It's usually a document, often a spreadsheet. If you choose to use a spreadsheet, mark our words - it will quickly become unwieldy! Cap table management software is way better.

In a cap table, you can expect to see founders, early hires, investors and even family and friends if they've helped get the business off the ground. 

As well as the name, address and contact details of each shareholder, a good cap table clearly lists a company's securities and key details such as:

• Authorised shares/options
• Outstanding shares/options
• The class and type of shares
• The nominal value of each share
• Details of any voting rights or rights to dividends
• Price per share
• Dilution details
• Any convertible loan notes or warrants

If you really want to go to town, your cap table can also include possible sources of funding, any future mergers you have your eye on, and anything else you’re planning from a financial point of view that would impact shareholders.

However, to avoid confusing and overwhelming potential investors (and for your own sanity) it's best to keep your startup's cap table as tidy and as up-to-date as possible. 

Think of your cap table as a representation of your company. You want to make a good impression, right? (We'll come back to this later).

Download our free cap table template, or better still, book a free consultation to see our cap table software in action.

Now, here's how to unlock the potential of your cap table.

How to make the most of your cap table

1. Add investors who add value

In the very beginning, startups usually have just a few shareholders. As time goes on, your cap table will more than likely grow.

There is no magic number for the number of people who should be on your cap table. What's more important is what they bring to the table. 

So, what are they bringing to the table aside from cash? Perhaps a special set of skills, years of industry experience, extensive market knowledge, sound business advice, or physical resources like a workspace.

Far too many founders assume that they can do it all alone and that they don’t need advice. That’s closed-minded. Seeking the right investments isn’t only about money, it’s also about tapping into years of experience and having the humility to listen and take it on board.

2. Diversify your cap table

You also want your cap table to be as diverse and inclusive as possible. It's no secret that at present cap tables are dominated by men. According to Beauhurst, just 20% of shareholders at high-growth startups are women.

But it's not just about gender. According to one report, over 80% of the UK's angel investors are white. With a diverse cap table, you'll not only unlock insights from people from all walks of life but also play a part in transforming the investment landscape for the better.

Every investor will boost your spending power but what's more valuable is the knowledge you could gain and the wealth of experience you could draw on by having a diverse cap table.

3. Use your cap table to network

They say it's not what you know, but who you know that will help you get ahead. Maintain a positive and professional relationship with your investors and you may just get the opportunity to meet other investors, industry leaders or perhaps your next key hire.

But be polite when asking an investor for a warm introduction, as it can be time-consuming for them and they also want to protect their relationship with whomever it is you'd like to meet. 

Alternatively, there are plenty of networking events in the UK that provide an opportunity for founders to meet all kinds of investors. 

4. Use your cap table to attract investment

Let's say you've gone through one or two funding rounds and now you're approaching another and you'd like to find a new investor.

When seeking investment, you need something to show potential investors. So make sure your cap table is accurate at all times - this will give you and your potential investors the right information to discuss and work around.

It’s likely that investors will have questions and you need to appear confident and knowledgeable in response. If you don't understand your cap table, how do you expect them to?

Don’t be afraid to be proactive when seeking investment. Do some research and identify the backers you’d really like to get on board. Then, prepare your pitch and your cap table. 

If you were thinking of investing, you’d want to see some numbers, wouldn’t you? Investors want to understand what they're buying into and who else has a stake.

5. Embrace technology

A spreadsheet can quickly become a sprawling mess, whereas a digital cap table provides a clear view of company ownership. Vestd keeps your cap table in check, automatically updates Companies House and reduces unnecessary paperwork.

Book a free, no-obligation consultation to see how easy cap table management can be.

Your cap table is so much more than a spreadsheet of numbers! Start seeing it as a reflection of your company. A resource that you can tap into and one that could secure game-changing funds for your startup.