Why you shouldn’t use a spreadsheet: 

We all love a good spreadsheet, but they leave your data and information open to errors, which means mega issues for you down the line. Investors can find basic spreadsheets hard to understand, so trust us – it’s worth your time looking into which software tool is right for you. The number one issue with using spreadsheets: formula errors. We see these much more than you’d think (in fact 90% have an error or two at least), and you won’t find out about it until your next fundraising round when it’ll be too late. 

So let’s take a look at what you should be looking for in a tool that suits you and your startup. To read more about choosing the right software our friends at Cake Equity have covered this in a lot more detail here, but for the quick lowdown read on👇

How to choose the right cap management platform for your startup:

• Pricing: some products base their pricing on the number of users, so be wary of this. The best cap table software are usually free to try out, and have transparent/tiered pricing where you don’t pay for features you don’t need just yet – very helpful when you are growing 
• Features: you will need the ability to store plan documents and signed option agreements with options or stock certificates
• Integrations: integration with your HR system to allow for automation of tasks and paperwork approvals upon employee termination
• User-friendly and intuitive interface: overall user experience should be at the top of mind of every modern software, so look for a software with an intuitive user interface that’s easily learnable, efficient, and easy to use. Some startups bring along their lawyers to set up and review their cap table for them, so you want a cap table that your legal team can navigate with ease as well, this can be easily exported from the software you choose.
• Digital functionality: make sure that the software offers all the features you need to manage your cap table effectively, like the ability to track various types of securities (e.g. common shares, preferred shares, options), manage SAFEs and other convertible securities, handle different types of equity events (e.g., funding rounds), model scenarios, and manage stakeholders. Functionalities like mobile accessibility, electronic signatures, real time updates, as some stake holders will be accessing your cap table software from different parts of the world, in different timezones, so you want it accessible 24/7
• Modeling, reporting and compliance: what each startup needs from their cap table management software differs from company to company, so the best cap table management software provides tools that make generating recurring reports easy, and needs to be compatible with any device so that sharing information when necessary is possible
• Global capabilities: complying to country-specific taxation etc is important when issuing stock options to an employee outside of your base country

What’s next?

Make sure you stop and think about what you need now to get your cap table set up the right way. Basic errors at the start can have massive consequences later on, and even though we all like to think we’re not going to make mistakes like anyone else – we’re only human! So make sure you leave that spreadsheet alone to do what it does best, and use the tool that will work best for this job.