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There are many investors who simply ignore the cap table. If you don’t have one of these spreadsheets handy, you really should think about getting one. Having one of these sheets handy can make it easy to identify potential opportunities for investing, as well as be a tool to help you negotiate a deal at a roundtable. Here’s why:

The primary reason you want a cap table spreadsheet is that it is very difficult to accurately calculate the value of an individual stock. This is typically represented in your cap tables as a tab separated from the spreadsheet which displays the entire debt total as investor and that sort of other interest calculation by investor. Needless to say, many experienced entrepreneurs naturally focus only on the first tab of their cap tables spreadsheet which clearly shows ownership by owner, founding member, etc and for these investors this is really the beginning of negotiating at a roundtable. Of course this also means that this first tab is extremely hard to interpret.

As we’ve discussed previously, the cap table Excel spreadsheet is very well suited for representing multiple types of investors. In startups , some of the spreadsheet programs even let you drag and drop different types of investors into a range which represents how many shares or units you would like to invest in. The problem is that most financial planners and investment managers shy away from this type of customization because they know that only a small percentage of investors actually take this approach. This means that it is not well suited for investment management at the “long term” because the results are based on a small number of investors and their purchases and sales are too locally sensitive to generate much attention from long-term investors. But this is not true for all investors.

On the other hand, if you use cap tables on a daily basis, you’ll soon begin to see the benefits of having them as part of your financial toolkit. They make investing very easy and allow you to view information quickly which gives you better insights into the movements of any particular security. You can enter price ranges for particular securities as well as time periods for each day. And because the sheet is customizable, you can change the format in order to show the data in either a visual presentation or a table format so you can take it with you when you travel.

One of the biggest reasons to include a cap table in your arsenal is to attract new investors. New investors typically have a limited amount of capital. If you are able to provide them with a platform that allows them to track price fluctuations, they have a far greater likelihood of being able to participate in some of your best deals. In return, you’ll be able to add new members to your team who are constantly updated on share price movements as well as able to trade options on those stocks themselves. The returns on this investment are likely to be substantial as well.

A cap table spreadsheet is particularly useful when you are planning on entering into an initial public offering. If you plan on going the route of an IPO, the first thing any potential investors will want to know is what the exit price should be. With an exit waterfall, you can easily show them how much equity you will be willing to sell for in the event you aren’t able to raise the capital needed to execute your deal. In addition, it allows you to set thresholds above which you won’t participate in any transactions if the price doesn’t pass the thresholds that you have set.

Some people don’t really like to focus on exit prices. However, if you want to attract more equity capital, you need to provide a very reliable method for calculating it. This is especially true if you are planning on selling a majority of your common stock. The concept of exit caps for these scenarios are especially helpful as they eliminate the potential for dilution as well as providing a floor price for potential investors.

When it comes to determining which financial obligations you are willing to undertake in the face of dilution, there are really only two options available: take a long position or a short position. Long positions are riskier and provide weaker equity compensation. On the other hand, short positions provide stronger equity compensation but carry less risk. These are the two positions you must choose when planning on investing in startup companies. The two options, however, are oversimplified in their basic forms. There are in startups to consider when planning on entering into startup transactions.