You have investors. Now what about the cap table?

Keeping investors happy

There are plenty of TED talks on how education is changing at a revolutionary pace, and almost all of them touch on the technology underneath it. Organizations like Khan Academy bring high-quality, free digital education to children all over the world, and every university now lets students take classes online. The busy single dad who could never have managed the commute to campus can take classes at work and run a group study over video.

Recently, a SaaS education-content company forwarded us an email from one of their investors. She wanted to know when her loan would convert to stock. The founders didn't have a good answer, and it got them asking more of their own questions. How do we value the company? Do we need to report anything to the government? Will the second round of financing dilute the founders' ownership?

What we did

It's a complicated problem full of legal pitfalls. We went through the prospectus, the legal documents, the personnel records, and the bookkeeping. From that we prepared a cap table and set up the accounting so ownership percentages and requirements could be seen over time. We coached the founders on the status of ownership and how to handle investors, filed every applicable report with the government, and helped with a valuation.

The result

The investors were pleased with how professionally the company handled its investor reporting responsibilities. The founders said it improved their odds of closing a second round of financing.