The ins and outs of a capitalization table can be a bit messy. In order to make this mess a bit more manageable, we are working on a teaching note that will offer a play-by-play construction of a capitalization table, across multiple rounds of funding and various sorts of preferred share terms.
In the meantime, we have developed a couple (hopefully) simple Google Sheets to highlight certain of the most common ins and outs. Via these Sheets, you can change the final Acquisition price of a venture to see the way in which Liquidation multiple and preferences (e.g., non-participating versus participating), dividends, and other terms impact the payouts from that acquisition. Have fun!
This Sheet provides a capitalization table with payouts (opens in a new window/tab) for a venture under two different types of preferred share terms:
- Non-Participating Liquidation Preference
- Participating Liquidation Preference
This Sheet provides a capitalization table with acquisition payouts (opens in a new window/tab) for a venture that has multiple rounds of investment, and a mix of liquidation preferences:
- Initial Founding of the venture, via common shares;
- Seed round of funding, via common shares;
- Series A round of funding, via non-participating preferred shares;
- Series B round of funding, via full participating preferred shares.