Equity Investments, Loans and Alternative Funding

This article is a complete guide about capturing and keeping track of all methods of funding in the Venturelytic app. It talks about cap tables, debts and different alternative funding methods.

Where is funding managed in Venturelytic?

Funding can be managed through Investment Opportunities and Investment Monitoring. Navigating to the Funding tab, there are 3 key action buttons, as well as 3 tabs, where high level information is quickly accessed.

How to access and manage the cap table:

Under the sub-tab 'Cap Table' previously recorded data is visible at quick glance. Clicking on the 'Manage Cap Table' button will open a new window.

The cap table in Venturelytic is divided into 4 spaces: 

A: Shareholders

B: Share Classes

C: Share Activites or Transactions

D: Cap table overview

A) Adding a Shareholder:

When adding shareholders, multiple accounts, contacts or funds can be selected before adding them all with one click to the cap table. When no existing record with the given name is found, a new account or contact can be created on the spot. Alternatively, the user can decide to create a shareholder without underlying record.

Depending on the type of shareholder (account, contact or fund) a different icon will appear next to their name.

B) Adding Share Classes:

The next step is to add share classes. Only the name is required but additional information can be captured for each share class.

C) Adding Share Activities

Only once shareholders and share classes are chosen, the share activities section becomes editable.

Clicking on +, a new share activity line is added. Existing share activities can be deleted or edited.

Required information to save a share activity are: 

- Date of transaction

- Type: Are shares issued, transferred or bought back

- Who are the buying and the selling shareholders?

- Which share class is in question?

- Number of shares

- PPS: the price per share

- the total transaction cost

D) Cap Table Overview

Finally, when share activities are recorded, the cap table overview will show a pie chart, displaying the ownership percentages for each shareholder. From here the user can navigate to the table view and back. The table view shows the ownership by share class (the fully diluted cap table is explained later on).

Adding a Debt:

The second action button under the 'Funding' tab records a debt. Under the sub-tab 'Debt', high level information of previously recorded debts is accessible.

The debt pop-up window has a collection of fields which is customizable. The only required fields are Debt Name and Loan Provider. Different Loan Types are available to choose from. Also the status can be changed.

Once created, the debt page links back to the Investment Opportunity/Investment Monitoring, as well as to the venture account. On the 'Payments' tab, repayments of the debt are recorded.

The progress bar on top, shows how much of the debt has been already paid back. Click on the button 'Add Repayment' to record a new pay-back.

When are repayment is recorded, it's important to tick the 'Is Paid' checkbox, otherwise it will not be taken into consideration in further calculations.

Adding an Alternative Funding:

The last of the action buttons is to add an Alternative Funding. Here, the user records SAFE Notes, Options, Grants, just to mention a few. Also here under sub-tab 'Alternative Funding' previously recorded fundings can be accessed.

Depending on which alternative funding method is chosen, a specific section appears in the detail page.

How to capture convertible fundings in Venturelytic?

Debts: 

In the debt detail page is a checkbox called 'Is Convertible'. If that checkbox is ticked, a new 'If Convertible' Section appears where additional information can be recorded.

The 'If Convertible' section captures a lot of information. The outstanding principal, discount rate, valuation cap and conversion trigger, are fields the user can fill in. The latest valuation and the current outstanding shares are ae automatically filled in, if a cap table and a valuation exist in the system. 

On the right side prices per share are calculated with different methods, but only the lowest price is used to calculate the number of shares upon conversion. We also added a picklist field where the preferred rounding method can be selected for the final expected shares on conversion.

Alternative Funding:

Only a few alternative funding methods are convertible, those include options, warrants, SAFE notes and ESOPs. The convertible information is included in the method-specific section in the details page.

Convertibles tab in the cap table:

next to Share Activities tab in the cap table  is the Convertibles tab. All fundings that are marked as convertible, appear automatically in this list. However, only 3 fields are editable in this tab: Shareholder, rounding method and 'Include in Fully Diluted'-checkbox. The shareholder field can be filled with one of the pre-selected shareholders. If the field is left empty, a placeholder shareholder is automatically created in the background.

Fully Diluted Cap Table:

In the cap table overview the user can switch to the fully diluted view by clicking on the right button. Instead of showing the number of shares by share class, you can see here the outstanding shares and the shares issued upon dilution. Also, the total ownership upon dilution is visible. 

Also the fully diluted cap table can be viewed as pie chart.