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Why Your Free Excel Cap Table Template Isn’t Cutting It

What Is Cap Table Management and How Can It Do More for Businesses and Investors?

by Alex Broudy, Technical & Financial Writer
Nov 14, 2022

As the year comes to a close, many accountants are doing last minute Google searches for “free excel cap table template” to prepare for 2023. While using excel templates can help small businesses keep track of finances, the process quickly becomes cumbersome as businesses grow. New cap table management solutions now make this end-of-year sprint more manageable, and improve the investor experience overall.

How Cap Table Management Streamlines Accounting

Capitalization tables, more commonly referred to as cap tables, keep track of companies’ ownership rights and automatically update their balance sheets whenever a change is made. This automation reduces manual labor needs and increases transparency into current company financials, benefiting both businesses and investors alike.

Cap tables tell businesses who owns what and how much they own by recording all of a company’s assets, including stock, convertible notes, warrants, and equity grants. 

Cap table management is important because it helps companies make business decisions like finding the appropriate valuation for raising future fundraising rounds. Good cap table management solutions enable businesses to operate efficiently by delivering financial updates to stakeholders automatically. Great cap table management solutions keep invested parties aware of their equity positions and integrate distribution functionality so that investors receive distribution payments automatically. Since cap tables are a key tool in determining a company’s valuation, it’s important to have a cap table management solution that enables businesses to keep current and keep investors informed.

Free Excel Cap Table Templates versus Cap Table Management

One major drawback of using free excel cap table templates is that there is no single source of truth. Multiple spreadsheets are needed to manage the records of company assets and liabilities between multiple parties. And this can be a drag on resources.

If a change is recorded in the company’s balance sheet but not the company lawyer’s balance sheet, there is a need for reconciliation. This process is not only inefficient but costly.

For every small change needed, another email or phone call is required to confirm that the change appears correctly in all corresponding spreadsheets. This is unnecessary friction. Finding the right cap table management solution can make businesses more efficient and benefit stakeholders by improving their bottom line.

Planning for What's Next

Rounding out the year, it’s critical for businesses to find solutions that fit their investors’ needs. While using spreadsheets can help keep track of financials when businesses are just getting off the ground, more mature businesses should consider using cap tables to plan ahead. This way, investors can know that business valuations are current, and businesses can focus on delivery.

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