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Cap Tables: Five Reasons to Stop Using Spreadsheets


Using a spreadsheet to manage your cap table may seem like a reasonable solution for an initial approach, but down the road it may create challenges for your company; particularly, for growing companies looking to expand, raise new rounds of funding, and hire top talent.  Here are five reasons you may want to stop using a spreadsheet to manage your cap table.


1. Version control: competing sets of cap tables

Since spreadsheets are easy to copy, share and circulate within a company, those who use them often find they have competing versions of their cap tables and equity records.  One stakeholder’s version may not only differ from a colleague’s version and may also differ from the version maintained by their law firm or counsel of record. Lack of version control may create confusion for a company’s founders, shareholders and investors, and may be a significant problem when it comes time to seek a new round of funding.


2.  Scaling may be difficult with spreadsheets

While spreadsheets may be sufficient for an early stage company to track the basics, growing companies often find they outgrow a spreadsheet as their cap table changes and their equity needs become more customized.  Raising funding, issuing options, tracking vesting schedules and multiple shareholder classes all increase the complexities of a cap table.  Mismanagement of these customization can lead to errors and problems when raising new rounds of funding.  With spreadsheets, you may also spend a lot of time and money manually updating equity grants, transactions, and calculating current ownership percentages.


Spreadsheets may also fail as an equity plan solution because good equity plan management is more than just keeping track of data in a cap table.  It requires an understanding of how equity affects compensation, an understanding of how funding will affect dilution, planning for the future growth of your company and much more.  


3. Spreadsheets make it difficult to keep a historical record

Have you ever made the mistake of editing a document and saving, only to realize later that you accidentally deleted something you shouldn’t have?  Having saved over the original, you can’t go back and fix your mistake.   Would you want to make this mistake with your cap table?  Spreadsheets don’t keep a historical record of all changes made to them.  Unless you save a new version after each change, you won’t be able to see how your cap table has evolved over time. As a company grows and new equity is granted, it’s important to maintain a historical record so updates can be validated and errors corrected.


Transaction history is also challenging to track on a spreadsheet. Shares can be transferred, repurchased, converted, or canceled, and showing the origin and history of certificates is vital.


4. Not accessible by shareholders

When using spreadsheets, there is no easy way for many shareholders to see the current status of their equity.  You may not want to give a shareholder access to the full cap table.  To limit their access, you may end up taking time out of your day to reconfigure the spreadsheet.  It may also be difficult to communicate that info to the shareholder as emailing it may create a security risk.


5.  A spreadsheet alone may be an insufficient record

By itself, a spreadsheet is missing many of the key components required for granting and managing equity.  While it may record the basic information about who holds equity, the lack of a formal process may put the company at risk.  Many companies get into trouble when they make non-paper promises that are recorded in a spreadsheet, while having nothing in writing.  Misunderstandings and disagreements over equity may derail future funding or even ruin a startup or growing company.  A formal process sets proper expectations and documents the specifics of the equity.  This may help protect the company from future problems.   Don’t let a spreadsheet replace the formal process of issuing binding, detailed agreements, as they pertain to equity grants.


The Solution

Shareworks Startup addresses each of these challenges to help ensure that your cap table is up to date and accurate. When you use Shareworks’ platform to manage your cap table and equity plan, you’ll have a single record of your company’s equity administration, eliminating potential competing versions of your cap table.

You may be asked to produce an up-to-date cap table on short notice. Any new round of funding, equity award and stock issuance entered is automatically updated in your cap table on Shareworks - in real time. Shareworks calculates the fully diluted percentage of ownership for all equity stakeholders at your company, whether they are investors, consultants, or employees.

Within the platform, you can manage access and visibility into your cap table, and you’ll have an accurate historical record every time someone makes a change. Since shareholders can login and see their own equity, they’ll have a better shareholder experience and that may save you time when you’re not forced to respond to simple questions they may pose. 

Finally, with Shareworks, you can track all of your company equity awards as well as disseminate the detailed award agreements electronically on a single platform, keeping them safe and accurate.  When it comes time for reporting or an audit, you’ll already have everything in order.


Learn about how Shareworks can help you manage your cap table and equity plan.

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Morgan Stanley at Work and Shareworks services are provided by Morgan Stanley Smith Barney LLC, member SIPC, and its affiliates, all wholly owned subsidiaries of Morgan Stanley.

Morgan Stanley Smith Barney LLC nor its affiliates and employees provide tax or legal advice. Please consult your own tax and legal advisors.

CRC 3935418 (12/21)