Most cap table managers out there are little more than registry tools to make some data available to stakeholders. But is that enough? Will this help startups' funding efforts? I think not, and I would like to tell you why.

What is a good Cap Table Manager?

This is a question that we make to ourselves and to our customers every single day at Eqdeal. And in our humble opinion, we now believe there are three fundamental caracteristics to a good cap table manager. To enable thurst (and therefore speed) to the funding process, a cap table manager must be:

1. Chronologically Intuitive,
2. Prospective and
3. Internally Consistent

Let's dive a little deeper on these three characteristics and why we believe they are fundamental to a cap table manager that maximizes the startup odds of funding.

1. Chronologically Intuitive
Every cap table have a natural, chronological order. It begins with the equity founders, and after every investment round, previous equity holder can (or not) be diluted. A Cap Table Manager should present every investment round to you in it's proper ordering, so you can understand it's history and check for errors in seconds, not hours. When issue shares for the latest round, it's intended (or original) participations should always it's post-issuance numbers, and the cap table as a whole should never be above 100% (obviously). A good cap table can instantly show you that the issuance went as intended, so founders and investors can sleep in peace.

Tip #1: A Cap Table Manager should make it easy for any investor to understand it's history, and thus minimizes due dilligence efforts.

2. Prospective - A Cap Table isn’t just a static snapshot of shares per stakeholder. In any reasonably mature Cap Table, you’ll encounter equity derivatives—like Stock Options and Convertible Debts—that might convert to equity shares under certain conditions. But these “future stakeholders” will usually remain hidden in most Cap Table Managers out there unless you go through a cumbersome simulation process, requiring you to specify how each derivative investment should be considered. This means you end up running “simulations” every time you need an accurate view of your Cap Table. Not only is this tedious, but it’s also a major time drain and prone to errors.

That’s why at Eqdeal we’ve introduced the concept of “reserves” alongside shares for every investment—something you won’t find anywhere else. The reason no one else offers “reserves” is that it demands a far more advanced calculation engine, which is why we developed the eqSolver, a sophisticated mathematical solver that can process the most complex cap table situations. with ease.

EqSolver's sophistication means simplicity for the founder and speed to the funding process. In fact, our onboarding team was able to do a migration case only a couple of hours where the customer was unable to properly solve all dilution issues on Carta in more than six months and dozens of e-mail exchanges with Carta's support team,

With “reserves” (and eqSolver), we streamline your Cap Table experience, making it more productive and straightforward. Think of “reserves” as a pre-calculated simulation, showing exactly how many shares a particular investor will receive if and when a particular instrument is exercised. We lift the weight so you can always have the best data for snap decision-making.

Tip #2: A Cap Table Manager should not force you to make simulations every time you want an updated view. The most intuitive and useful cap table view is the prospective view.

3. Internally Consistent A good cap table should not allow input of conflicting data. A lot of tools out there will allow you to input a valuation, an investment and shares for a safe, for example, in a way that makes it impossible to reconcile. For example, let's say an investor invested USD100k on a startup with a USD1MM valuation, and agreed to receive 500 shares out of 10.000. Wait, what? That's 5%, shouldn't it be 10%?! Yes, and that's a very common situation. But no on Eqdeal, because we always make sure every single investment is internally consistent, so investors can always have the highest levels of confidence in the numbers we provide, and startups can fund themselves faster and faster.

Tip #3: A Cap Table Manager should make sure that every input is consistent, so all stakeholders can thrust their data without long and expensive due dilligences.

There you have it, three fundamental qualities only the very best cap table managers have.

With Eqdeal, your Cap Table is always forward-looking and ready-to-use, providing the clarity and precision you need. You can try our engine today—it’s forever free for up to ten stakeholders and very affordable beyond that. If you have any questions, drop them in the comments below, and let’s chat.