Cap Tables, Share Structures, Valuations, Oh My! A Case Study of Early-Stage Funding
Case Study of Early Stage Funding from Crunchbase
For many entrepreneurs, especially first-time founders, raising outside capital can be daunting. Between all of the new vocabulary – like “term sheets,” “capitalization tables,” “pro rata,” and different valuation metrics – and the very real legal implications of the agreements being signed, it’s easy to get overwhelmed.
When you’re first starting out (or just need a refresher), it’s often best to learn from examples. So, that’s what we’re going to do today. We’re going to explain the basic mechanics of the first rounds of funding, some of the key terms involved, and how different types of financial instruments and deal structures work. Let’s start a company and build a capitalization table! And, for the sake of keeping this accessible, we’re going to try to keep the terms simple.