Maximizing Ownership by Using Multiple Valuations
Cap table management is a must when it comes to your private portfolio investments. Managing a cap table means that you've got one very specific person looking at all the details of your portfolio. This makes a cap table a highly useful tool for all kinds of investing. If you have private finances then you need to get out of the rat race to keep them healthy, with a cap table you can keep this from happening. In fact, it's even better to have a cap table than it is to not have one!
A cap table helps you understand your firm's capital structure, and makes it incredibly easy to spot who really owns what. Early on in your career you may find yourself the victim of "structural fraud". If you find yourself making this kind of nonsense, chances are it was done by some of your competitors, who just wanted an edge over you. In the early days of managing cap tables you need to be the hunter and take control.
The beauty of cap table management is that you don't have to be a hunter or a cop. You don't have to be a financial genius either. All you have to do is look at the numbers, and make decisions. Don't be afraid to invest in startups , because the early days of managing your cap tables can make or break your business. Startups need help managing their capital and you can help them out!
Early on in your career you probably funded a few startups . You've probably seen the capital structure which underlies all that startup money. This capital structure will give you a clue about how to go about managing your early days of venture capital. The startup capital rounds tend to be quite fluid, so it's important to have a handle on the whole funding round from day one.
The way I think about it is this: You run the startup from two different perspectives, as a startup manager on day-to-day management, and as an investor on an ongoing management principle. Every day you see deals, transactions, and equity issues which are primarily about either selling or buying shares of a company's stock. You also see the company's income statement and balance sheet from the perspective of an investor. That's what makes managing the startup for an ongoing management principle so difficult for a new manager. It all looks really simple from both the investor's and the startup manager's perspective on paper, but in reality there are some real challenges which are hidden.
The first thing is being able to track the income statement and balance sheet from a fast paced business environment which requires real time availability. With cap tables management software you can achieve both of these goals in record time! By the time you hit retirement age you'll have thousands of cap tables set up across the company. And as we've seen with the fast growth of online investing, things haven't always been that smooth. We had to adapt our thinking and software tools to make sure we didn't miss out on opportunities to make money.
So how do we deal with these problems and still allow ourselves to make money? We use our cap table automation software to look at the real-time picture of our companies' balance sheets. We then determine what those capital needs are. We determine if we can raise the funds, and then we make those sales. Once we determine those cap table requirements we then write the plan to do so. And when it comes to raising additional capital from investors we use the same tools for that.
This kind of detailed, day-to-day monitoring is simply not possible with the current set of methods for managing these cap tables for small, medium, and large businesses. And therein lays one of the biggest sets of problems. All of the investors we work with have their own rules and their own protocols. The best practices for investors are often a challenge for investors to follow and manage on their own. If they don't follow them, then they can't raise the equity or cash needed to operate in their firms.
We have found that the best practices for investors require using multiple valuation models. Multiple models allow us to more effectively capture valuation information and create investor proposals. Multiple models also enable us to look at the financial reporting to determine if the financial reporting and valuations are accurate. And perhaps most importantly, multiple models help us to consider how the cap table affects our bottom line. It is impossible to give a credible forecast of what the market value of a company's stock will be at any time. But with a model for valuations and financial reporting, we can make educated guesses about those valuations and financial reports.
And the single most important thing that we have found that we need to manage effectively is the cap table template. The cap table template gives investors a way to quickly create and manage all the different cap tables that they need to successfully manage their investment. This template speeds up the decision making process and makes managing the portfolio much faster. The cap table template is the most important thing that investors need to effectively manage their portfolios.