The Startup Capitalization Table - OTBC Startup Capitalization Table Online Startup Camp #2, Video 5 In the end, how much will investors own? How much will Founders own? Title osc2_video5_sources_cap_table.key

Copyright © Oregon Technology Business Center 2012

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The Startup Capitalization Table

Online Startup Camp #2, Video 5

In the end, how much will investors own? How much will Founders own?


Milestones and Funding Needed

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$2,500K

$2,000K

$1,500K

$1,000K

$500K

$0

-$500K

-$1,000K

-$1,500K

-$2,000K

-$2,500K

-$3,00K 2013 2014 2015 2016

PrototypeBeta Production

Release;Roll-out

Revenue Ramp


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Stages & Sources of Funds

Discovery Proof-ofConcept

Product Development & Beta test Revenue

Idea

Venture FundsStrategic Investors

Idea

Founders

Growth

Friends & Family

SBIR/STTR

Customers/Partners

Micro Loans

Seed Fund

CrowdFunding

Keep you Day Job

AngelsAngel Groups

VC Seed Funds

AngelList

Angel Conferences

Copyright © Oregon Technology Business Center 2012Source: Luis Villalobos, Managing Director Tech Coast Angels

Gadzoox Networks

Series AJan-96

Series BSep-96

Series CMay-97

Series DSep-98

Pre-money $4.6 $17 $69 $135

Investment $2.0 $8 $10 $21

Post-money $6.6 $25 $79 $156

Series A % 30% 19% 16% 13%

Cap Table Example

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Why Create a Cap Table?

• You’ll need to know who owns what stock!

• Thinking in terms of a cap table forecast:

• Puts fund raising into perspective

• Provides you a guideline

• Provide a projection of future value

• Investors will want to see it


Cap Table Example - Assumptions

• Assume 3 founders

• Founder 1: 50% of the stock

• Founders 2 and 3: 25% each

• Assume 4 million shares are issued when a corp is formed

• A Seed round + Series A, B, C investments

• All are priced rounds (not convertible notes)


The Beginning: Founders Stock

• Don’t forget to submit your 83b election within 30 days!

(See the 83b tag at otbc.org/tag_cloud)










Investments Through Series C

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Ownership at Each Stage











Assume a $60 million purchase




Founder 1: $4.9 millionFounders 2/3: $2.45 million




Founder 1: $4.9 millionFounders 2/3: $2.45 million

Seed investor: $350K -> $3.4MSeries A: $1.5 million -> $5.9MSeries B: $5 million -> $19M Series C: $10M -> $19.1M


Other Considerations

Liquidation preferences can have a big impact

Early investors often invest in later rounds

You’ll want to track every investor’s ownership in a detailed cap table.

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Your Startup Camp Mission: Week 5

• Develop a cap table projection for your business

• Seed through exit


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Resources

• otbc.org/tag_cloud:• cap_table, 83b

• OTBC cap table spreadsheet

• Questions? Discussion forum: OnlineStartupCamp.com


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OTBCTagCloud

otbc.org/tag_cloud


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Cap Table Meetup: Thursday, Nov. 1

• 3pm - 5pm (+ networking) at OTBC

• Not near Beaverton? Check otbc.org/sbdc for a local meetup

• Discuss cap tables

• Get/give feedback


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The Startup Capitalization Table

Online Startup Camp #2, Video 5

In the end, how much will investors own? How much will Founders own?

Documents

The Startup Capitalization Table - OTBC Startup Capitalization Table Online Startup Camp #2, Video 5 In the end, how much will investors own? How much will Founders own? Title osc2_video5_sources_cap_table.key