Launching a company brings with it a lot of responsibilities for an entrepreneur. One of the greatest troubles is to manage the shares in the company. A share in the company represents the ownership of the company, and being an owner means you need to issue and manage shares properly to keep the best interest of the company in place.
The shareholders of a company have the rights to select the person to run the business. These shareholders are also involved in making most of the main decisions in the company, like if more investment is needed or if a company should be sold or not. When a company needs some outside investment from an investor, they always come across the decision to give equity in exchange for future investments.
The concern here is not about issuing shares, but issuing the right amount of shares to the right person so that you, as an entrepreneur, do not lose everything you have put into the business. That is where the cap table comes in. A cap table is what can help
What is a Cap Table?
A cap table is a table or a spreadsheet made to keep track of the capitalization in the company or the ownership stakes in the company. The stakes include preferred shares and options, capital paid for the securities by the stakeholders, and the equity shares.
With the cap table, you would be able to see the ownership stakes right in front of you.
In short, you would be able to see who owns what part of the company or who has contributed how much in the business. In one glance, the owner would be able to see the overall capital structure of the company with a properly managed and updated cap table.
From this, the entrepreneur needs to have a cap table when they launch their company. It is important to keep updating the cap table from time to time. Now, the trouble with this idea is that spreadsheets become complicated as the company grows. This makes things complicated and the owner can end up getting confused with what details they have added to the table.
To overcome issues with using a spreadsheet to create a cap table, some businesses took up the responsibility to create great cap table applications. With everything online, it has now become easy for owners to add all the data in the cap table and also manage the table easily. Let us dive deeper into this.
Cap Table Applications
As mentioned above, cap table applications are the in-thing for this generation. Many businesses have begun using cap table applications to stay up to date with what is happening with the ownership in their company. It is much easier to track the shares of the company and also for issuing shares electronically. As a matter of fact, by issuing shares electronically, you would be able eliminate the use of paper and become environmentally friendly.
Moreover, you would also be able to stay compliant with the equity laws, as the applications available help you take care of these things. It leaves you a notification if anything is going out of place. Also, instead of spending time creating tables and editing them, the application would leave you with much more time to be used in growing your company.
One such great application trending now is –
But why do you even have to issue shares? Well, if you can run your company without the need of any investment or you do not want to expand your business every, then you might not need to issue shares. However, at some point in time, most companies need some help in financing. So, before we can get into why Eqvista is the right app for you and what it has to offer, let us understand a bit more about why you need to issue the shares.
Why are shares issued?
There are many reasons as to why shares are issued in a company. Here are the main reasons:
- A way to raise your business’ profile
- New financing for the company
- An acquisition currency in the form of shares
- A market valuation for the company
- An exit for founding investors who want to
- A mechanism for investors to trade shares
- An incentive for staff using shares or share options
Other than these things, the main reason why companies issue shares is mostly to get outside investments. Nearly every company comes to a stage where they need help with investment, regardless of the company being a large successful corporation or just a startup.
That is when you would see the importance of your cap table application. Let us talk more about
Eqvista was created with the idea in mind to ease the current practice of share management, handling the cap table, and company filings in a company. Basically, the professional team at Eqvista aims to assist clients from the incorporation of their company to the issuing of shares. In short, Eqvista (we) would help you to file the company with the Division of Corporations of the state in which you want your company to be filed in.
After this, Eqvista would also help you issue the shares of your company electronically, along with cap table management. While running a company, there are many tedious filings involved when you manage the company shares. If you are about to issue and manage the shares in your company properly, you would also need help with the filings related to equity to stay compliant with the laws. Eqvista helps you with this as well.
The application has been developed in such a way where it would affect all the sections of the company filings. This means that what took you hours to complete, would now be done in minutes. In short, Eqvista has worked towards making things simple for you.
To understand how great Eqvista is, let us discuss about Jacob who has recently used our application and has benefited from it.
Jacob is newly turned entrepreneur who had a great idea of creating smart furniture for tiny spaces and selling them at an affordable rate. Yes, there are a lot of companies that offer smart furniture to people, but they are usually expensive and many cannot afford it. Jacob wanted to change this thing and help those who are need it. But for this he needed to first incorporate his company.
After a good amount of research online, he came across Eqvista. The reason why he was attracted to Eqvista was the fact that it offers all the services to help entrepreneurs in the beginning, Jacob contacted the company and came across some helpful people who first helped him in incorporating his company in Delaware. After that, he was told how the platform works so he could easily issue and manage the shares of his company.
As soon as the company was in place, he had to look for outside investment, as preparing furniture is not something cheap. But building furniture in a garage is not the same as producing furniture on a large scale. He searched for many angel investors and came across a person who was ready to invest in exchange for convertible notes.
And this was when he had to add the details in his cap table. Thanks to the Eqvista application he had registered with, he could easily issue the convertible notes electronically. Jacob was successfully able to begin producing a lot of smart furniture pieces. His sales increased and he began to get orders from around the country. At this point, he was only able to supply products within the state. With a huge surge of orders, he needed another round of investment.
He went out to look for investors for his company’s Series A round of funding. He did find an investor, but this time it was a venture capitalist firm that agreed to invest in the company. With Jacob’s company shares at a price of $10 per share at this point, the VC firm was ready to offer him with a $5 million investment in exchange for 500,000 shares of the company.
Jacob agreed to this, and as soon as he issued the shares via Eqvista, the convertible notes that were given to the first angel investor converted into equity at the price of $3 per share. In the end, Jacob found it very easy to issue and manage the shares online through Eqvista. He had to pay only for the incorporation and any other government filings. Moreover, the team at Eqvista also helped Jacob with the 409A valuations and in filing other equity related files with the government.
So, what are you waiting for?
Before your coffee gets cold and things get messed up, check out the Eqvista cap table application and stay ahead. What’s the harm in trying it? Take 5 minutes to try the application, and see if its right for you. Click on the link here and register with your email ID today!