Cap Tables: An exercise in Excel’s limitations

(Originally published on June 8th, 2017 for

To a newly formed startup, the idea that your cap table could become a massive headache seems ridiculous. Early on in a startup’s life, the cap table is a simple spreadsheet on Excel with names, titles, percentages, and number of shares. This seems manageable by even the most basic of Excel users.

But as your company grows so does the complexity of your cap table. Raising capital means more investors and different share classes. Start adding rows. Hiring employees means tracking option grants and vesting schedules. Now include sheets and formulas. And when some of those employees leave, their options need to be purchased by the employee or returned to the company option pool. Time to change and delete data. And with a cap table, a single mistake means the loss of sensitive data.

As Tomas Tungz, a VC at Redpoint, wrote, “At some point, the Excel workflow becomes unwieldy and burdensome.” Even still, companies are wary of transitioning from Excel to a cap table management software. Busy CEOs worry that transferring the data will be just as much of a hassle as updating their Excel or believe this is a change that can be saved for another day.

While managing a cap table in Excel is time-consuming and costly, if your business undergoes a larger strategic shift; such as a merger, acquisition, or change in corporate structure, Excel will simply break. Here are a few examples we’ve seen at Carta:

1. Changing your corporate structure:

A company we will call McKenna Corp, was growing year over year, but, saw a strategic opportunity to convert from a C Corporation to two LLCs and save tens of thousands of dollars in taxes. While it was the right decision strategically, the process of converting common stocks to membership units and option grants to profit interest units required a massive change to their cap table. In order, to execute the business decision, they needed to be confident in their cap table.

In Excel, this process would have been a nightmare. McKenna had hundreds of stakeholders. Each stakeholder had to sign off on the change and each stakeholder’s shares and vesting cycle had to be properly mapped from the old organization to the new LLCs. By using software, each transfer agreement could be tracked online and all the shares could be converted automatically without human error.

The last thing McKenna wanted to do when making this shift in business strategy was to get stymied from cap table issues. Software was key.

2. Merging multiple companies into one:

A company we will call Lusca Media decided to go forward with a major merger. They combined five digital media companies with almost 100 stakeholders each into one larger entity. Half of the companies were using Carta while the other half were still on spreadsheets.

The cap tables for each of these five companies were extremely complicated. They contained over 15 shareholder classes, 3 different warrant and option grant types and specific vesting schedules for each set of shares. Not to mention hybrid option requirements. Combining these wasn’t just a simple copy and paste.

Software allowed Lusca Media to create rules for each of the companies being merged. These formulas would dictate how each of the share classes were transformed into shares of the new company. This meant making 10 or 15 calculations rather than 500. In addition, software allowed the old company cap tables to be saved so any mistakes could be reverted or corrected.

3. Getting acquired:

The dream of nearly every entrepreneur is to IPO. The next-best exit scenario is to get acquired. Carta recently worked with Trello during their acquisition.

Acquisitions are an incredibly delicate process, made more challenging by the fact that only a few select employees lead the charge while other employees remain focused on growing the business.

During Trello’s due diligence process they had to present to the acquirer with their current cap table, develop waterfall scenarios for all current employees and investors as well as show historical cap tables from numerous points in time. These snapshots would have been next to impossible to provide in Excel. With software, pulling this information only required a few clicks, allowing the acquisition team to focus on other important parts of the due diligence process.

In the end, Trello was acquired for $425 million.


Complexity and customization are the cause of every cap table frustration. In the beginning, a cap table is a necessary evil but as the company grows and becomes successful they come to represent something else; People who believe in you and are invested in your success.

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