Getting started with captable.io
How to build a simple cap table for your startup.
Thanks for your interest in Captable.io, a cap table modeling tool designed for startup founders, not CFOs or legal experts.
This post will take you through the typical steps in building a cap table from scratch. It covers incorporation and founder grants, adding employees and advisors, adding convertible notes and a quick look at round modeling to see how a future investment might impact your ownership.
Adding your company
You decide to co-found a startup with a friend. After a few months of nights and weekends exploring the idea with your co-founder you quit your day job and incorporate your new company. Although not a lover of startup administration, you know that investing time up front to keep your ‘house in order’ can save a lot of pain later on. Having a clean, accurate cap table is a good place to start.
The first step is to visit captable.io, and sign up. You check your inbox for an email from us and click on the validation link. This link takes you to a page where you can add your new company.
You add company name, website, incorporation date and some other basic company details.
Once your basic company info is added, you then choose how to start building your cap table. The default choice (shown above) is a simple form for adding the cap table basics. Captable.io also offers Excel template import and eShares import as a starting point for your cap table. The information added via any of these 3 setup choices is easily modified and extended later.
On the default simple form, you add 10,000,000 shares of common stock authorized based on the info in your new company’s Certificate of Incorporation. You also add basic grant details for yourself and your co-founder and add a stock option plan.
Note that captable.io holds a summary of your company’s equity-related info, but you still need to keep your supporting documentation organized. E.g. every time you hire someone you should execute and upload their option grant and signed option agreement to captable.io. Updating your cap table without the support of signed, board-approved documents is a common mistake.
Issuing founder stock
When you have added your company info and cap table fundamentals you are taken to the Captable.io overview page.
You can see both co-founder grants listed here in the Common class section of the Stock page. As further classes of stock are added later they will be listed here along with their associated grants.
Next you want to add a stock option grant for an employee. The quick create menu provides a convenient way to access common functions. Just click the ‘+’ icon at the top of the icon bar and select “Grant Stock Options” from the big blue menu that appears.
You add your first employee Elenore . After filling out Elenore’s name and email, you add her grant amount of 100,000 shares and set the exercise price to $0.02 based on the current common stock valuation. Elenore’s vesting is a standard 4 years with 1 year cliff. Clicking submit adds a record of Elenore’s grant to captable.io
Trust but verify
Each new option grant holder will appear as a stockholder in captable.io. You can view all stockholders by clicking the people icon in the left navigation. Note the banner at the top of this page indicating that your cap table now includes unverified grants. This feature distinguishes between grants where the beneficiary has not reviewed and confirmed their details and grants that have been reviewed and confirmed. To kick off the verification process for a grant click the orange ‘share’ button on the right.
Notice the orange curvy lines under David’s, Fiona’s and Elenore’s details. This line indicates that these stockholders have not yet verified their grants. The verification feature helps reduce the chance of an error or misunderstanding and requires each invited recipient to review their grant details and confirm that they are correct. Upon confirmation their orange line is removed. A cap table without any red lines is a completely verified cap table.
Adding convertible notes
After a chance dinner party conversation you attract your first seed investor Adam Angel. You negotiate an investment of $50k in the form of a YC SAFE with a 20% discount and a $10M cap. To add this note, once again click the ‘+’ icon in the left navigation and select ‘Add Convertible Note’.
You fill out Adam’s details, select the Y Combinator SAFE option, add amount, select Preferred Stock and add the note discount and cap.
Word gets out and you attract a number of other investors. As you add details of their investments to Captable.io they are listed on the convertible instruments tab, under the securities icon in the left navigation.
Sharing your cap table
As you build your cap table you start to need to share the information you have created with your co-founder, your employees, your investors and your attorney. Each type of person needs a different view on the cap table. The ‘Sharing’ tab accessed from the left navigation lets you invite people and select the level of visibility and write-access that is right for them. You can see who has accepted, send reminders and also revoke access if needed.
Scenario modeling
The team is making good progress and you have identified a repeatable, scalable business model. You start to think about growing the team further and the resources that will take. It’s time to think about raising some real money.
With multiple founders, multiple employees and advisors, multiple classes of stock and multiple convertible notes, it can be difficult to plan your institutional round. Questions like how much should I raise? at what valuation? how will this impact me and my team mates, can be hard to answer.
However, help is at hand. Select the Scenario icon in the left column and on the default ‘Round Modeling’ tab enter a ‘New Investment’ amount and ‘Pre-money Valuation’ amount at the top. Clicking the orange refresh button will update the page and show the impact of the new investment and also any notes converting. You can also explore the impact of increasing your employee option pool.
This rather long page steps through all the calculations of a venture round, shows how notes, warrants and the option pool dilute existing stockholders and and also shows how the math works.
The Liquidation Preferences section at the bottom is a unique visual calculator that shows how the ‘pie’ will be divided up when your startup has an exit. Click here for our post on Liquidation Preferences.
The other two tools under ‘Scenarios’ are ‘Exit Modelling’ and ‘Convertible Instrument Calculator’.
Some other useful views
The main Cap table tab provides a useful overview of who owns what. Click on the segments of the left pie, to see a breakdown of that segment in the right pie. This is useful for seeing the different stockholders who own a class, or the different classes that a specific stockholder owns.
The ‘Timeline’ sub-tab displays a list of all the changes made to your cap table in chronological order.
The Options sub-tab on the Securities page includes a useful visual graph of total stock options vesting over time. Clicking on any option holder in the table below will take you to that person’s individual page which includes a vesting graph for their option grants.
FAQ
A few questions come up regularly when our customers reach out to us using the orange feedback tab. (Yes, the tab works and it’s a good way to get in touch with us :)
How do I modify the total number of authorized shares? Click the Pie Chart icon in the left toolbar. Look for ‘Total Authorized’ and click the pencil icon next to the value. Note that to increase your authorized shares you must first approve the new total with your board. You will also be required to amend your company charter. More info in this useful article. https://www.dlapiperaccelerate.com/knowledge/2017/authorized-shares-vs-outstanding-shares-vs-reserved-shares.html
How do I add an option pool? When you first set up a cap table on Captable.io you are prompted to add your stock option pool name and number of shares allocated. If you skip this step or need to add a second pool to your cap table you can do this as follows: Click the Securities icon in the left toolbar. Look for ‘Plans’ at the top of the page. Click this and then click the orange ‘Add Plan’ button.
Thank you
We hope you find Captable.io useful. We continue to add new features and refinements. If you have product suggestions or feedback, please reach out to us at info@captable.io
Learn more about Captable.io and other tools from the LTSE.
-
