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Copyright © Oregon Technology Business Center 2012
1
The Startup Capitalization Table
Online Startup Camp #2, Video 5
In the end, how much will investors own? How much will Founders own?
Copyright © Oregon Technology Business Center 2012
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
Copyright © Oregon Technology Business Center 2012
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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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Copyright © Oregon Technology Business Center 2012
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
Copyright © Oregon Technology Business Center 2012
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)
Copyright © Oregon Technology Business Center 2012
The Beginning: Founders Stock
• Don’t forget to submit your 83b election within 30 days!
(See the 83b tag at otbc.org/tag_cloud)
Copyright © Oregon Technology Business Center 2012
The Beginning: Founders Stock
Copyright © Oregon Technology Business Center 2012
The Beginning: Founders Stock
Copyright © Oregon Technology Business Center 2012
The Beginning: Founders Stock
Copyright © Oregon Technology Business Center 2012
The Beginning: Founders Stock
Copyright © Oregon Technology Business Center 2012
Investments Through Series C
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Copyright © Oregon Technology Business Center 2012
Ownership at Each Stage
Copyright © Oregon Technology Business Center 2012
Ownership at Each Stage
Copyright © Oregon Technology Business Center 2012
Ownership at Each Stage
Copyright © Oregon Technology Business Center 2012
Ownership at Each Stage
Copyright © Oregon Technology Business Center 2012
Ownership at Each Stage
Copyright © Oregon Technology Business Center 2012
Ownership at Each Stage
Assume a $60 million purchase
Copyright © Oregon Technology Business Center 2012
Ownership at Each Stage
Assume a $60 million purchase
Founder 1: $4.9 millionFounders 2/3: $2.45 million
Copyright © Oregon Technology Business Center 2012
Ownership at Each Stage
Assume a $60 million purchase
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
Copyright © Oregon Technology Business Center 2012
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
Copyright © Oregon Technology Business Center 2012
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OTBCTagCloud
otbc.org/tag_cloud
Copyright © Oregon Technology Business Center 2012
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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
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?
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