In my conversations with many founders, they appear concerned about how to manage a “messy cap table”.
The way it works is that typically, a company has different investors that hold various instruments within the company.
These include shares, options, warrants, and convertible instruments like SAFEs.
When a startup has about 70 investors holding one or more of these instruments, they are reflected in the company’s capitalisation (cap) table.
So, if someone looks at the cap table and sees around 70 holders of different instruments, it can appear "messy."
There are however many options that can be used to solve this “dilemma”.
One is by engaging platforms like Carta, Capshare, or Eqvista that can help keep your cap table organized and up to date.
But not every struggling startup founder can afford such tools.
Another solution which can be explored is utilising a Special Purpose Vehicle (SPV).
An SPV is a company created for a specific transaction or purpose, which can aggregate multiple investments into a single line item on the cap table.
Now, instead of having 70 different entries on your cap table, you only have one entry.
This could make it easier to keep track of and understand. And look less messy.
Here's a detailed guide on how to manage a messy cap table using an SPV model when issuing SAFEs.
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