Technology

The price of Bitcoin and other cryptocurrencies tanked today, continuing a months-long slide that has seen the value of the digital currency slide by more than $2,000 from highs of above $10,000 earlier in the year.

Investors are still speculating about the cause of the crash, but hopeful cryptocurrency bulls before today had hoped that $8,000 would be the new floor for Bitcoin.

No longer. Today the price of Bitcoin dropped to $7,448.75, down from around $8,000 earlier in the day.

Investors aren&t sure whatbehind the crash, but Bitcoincommentariat pointed to two likely culprits.

One was the underwhelming performance of Facebookchief executive Mark Zuckerberg in testimony before Congress on the Libra cryptocurrency that his company is leading the charge to create.

However, an underwhelming performance from Zuckerberg and the potential fate of Libra, which cryptocurrency purists have scoffed at anyway, may be less concerning for the Bitcoin crowd than developments happening in Google quantum computing research labs around the world.

Earlier today, Google declared quantum dominance, indicating that it had solved a problem using quantum computing that a supercomputer would have taken years to solve. Thatgreat news for theoretical physicists and quantum computing aficionados, but less good for investors who&ve put their faith (and billions of dollars) into a system of record whose value depends on its inability to be cracked by computing power.

When news of Googleachievement first began trickling out in late September (thanks to reporting by the Financial Times), Bitcoin experts dismissed the notion that it would cause problems for the cryptocurrency.

&We still don&t even know if itpossible to scale quantum computers; quite possible that adding qbits will have an exponential cost,& wrote early Bitcoin developer Peter Todd, on Twitter.

The comments, flagged by CoinTelegraph, seem to indicate that the economic cost of cracking Bitcoincryptography is far beyond the means of even Alphabetmultibillion-dollar budgets.

Still, it has been a dark few months for cryptocurrencies after steadily surging throughout the year. The real test, of course, of the viability of Bitcoin and the other cryptographically secured transaction mechanisms floating around the tech world these days is whether anyone will build viable products on their open architectures.

Aside from a few flash-in-the-pan fads, the jury is very much still out on what the verdict will be.

That uncertainty affects more than just Bitcoin, and, indeed, the rest of the market also tumbled, as Coindesk pricing charts indicate.

Founders start a company because they have an idea they want to bring to market. As their company gains traction and matures, the way in which they manage their business needs to evolve to enable strategic decisions for growth.

Developing and properly managing acapitalization table(cap table) is one such necessary business evolution. In this context, capitalization is the sum and itemization of all those who hold equity in the company or the right to receive equity in the future. Tracking these items through a central means helps illustrate the ownership stakes in the business and what securities the company has outstanding.

For a first-time founder, it can be overwhelming to develop a cap table and make all related decisions. However, with the right resources and adoption of best practices, founders can better manage, maintain and leverage their cap table to provide actionable business intelligence and management.

For better business intelligence, look to your cap table

In many ways, the cap table is akin to the balance sheet in the sense that it represents the companyposition as of a certain point in time. The balance sheet shows the companyassets and liabilities. The cap table shows the companyownership and accompanying economic and voting rights. The cap table includes factors such as shareholder information, ownership position, rights to purchase additional equity in the future, vesting schedules, voting percentages and purchase price. It takes all of the material information related to capitalization and summarizes it into a digestible format to help founders make executive-level decisions for soliciting stockholder approvals, issuing grants to new hires, raising additional rounds of financing, calculating liquidation waterfalls for a liquidity event, etc.

When it comes to how much founders need to own the cap table, think about it this way: Not every CFO needs to build out the financial statements. However, every CFO needs to have a high degree of confidence that their financial statements are accurate — with systems in place to ensure accuracy so they can spend their time using the financial statements to make strategic decisions. The same is true for founders& involvement with their cap tables. Most companies rely on competent legal counsel to maintain their cap table and provide their executive team with actionable information in a digestible format.

Here are six best practices that help founders improve and maintain an effective cap table management process.

1. Familiarize yourself with its basic elements and formats

There are many different elements and formats of a cap table. Viewed as a spreadsheet, table or chart, the cap table can look different for every company at every stage of its growth. While the cap table tends to be simple in the beginning stages of the company, it will naturally evolve and become much more complicated as the company matures.

At a basic level, the cap table should list the equity stakes in a company, including common stock,preferred stock and stock options, and outline all of the ownership details for these securities. Other elements include transaction history and legal restrictions, such as sales, transfers, exercises of options, transfer restrictions and the conversion of debt to equity, among others.

The cap table should show the companyoverall capital structure at a glance, as well as detailed ownership information for each class and series of stock outstanding (see an example at the end of this article). Most importantly, it should always be accurate and up to date.

2. Recognize the importance of executive alignment

At its core, the cap table should be designed to help solve business issues for you. If you&re not using it to make decisions as an executive team, then itnot serving a core purpose. The cap table is also critical to your legal team, so certain aspects may be primarily for their use, but if the companymanagement doesn&t find the cap table helpful, that is a problem.

A good example of this is its role in the hiring process. Equity is a key consideration in talent recruitment and retention packages. Without an accurate cap table, you&ll find yourself in situations where you have to routinely ask yourself how many shares you can offer to a new hire, which can unnecessarily slow down the hiring process.

However, if you can use the cap table as a way to gain alignment on such matters, you can begin to use it to solve actual business problems. Rather than argue about which equity package to grant a new employee, your HR team can provide routine feedback on standardized equity packages to help improve or maintain competitive compensation.

3. Evaluate and implement tools to help you manage it

When it comes to understanding how detailed your cap table needs to be, compare it once again to the financial statements. In the early days of the business, financial statements don&t necessarily feel as valuable as they do in later stages of growth. They aren&t as critical to the business — yet — because itnot hard to recreate it whenever you need information to make a decision.

However, as the business matures and grows, it becomes more difficult to recreate the financial statement on an ad hoc basis, and virtually impossible to hold the information accurately in your mind. The same holds true with the cap table: In the beginning, you might be able to rattle it off the top of your head or have it documented simply in Excel, but as you grow, the information becomes more complex and you need better, automated systems in place. As with financial statements, creating good habits early on will serve you well as the business grows.

Using cap management software provides better capabilities and version control than spreadsheets to manage this process. Free software, such ascaptable.ioand Carta are great starting places for early-stage founders. Carta also provides additional features to manage your more complex cap table. Because the cap tableultimate purpose is to enable the executive and legal teams to make informed decisions, safeguards on administrative access and version control are critical features to consider when choosing which tool or application to use.

4. Determine and delegate ownership of the cap table

As you model new rounds of financing and analyze the impact on stakeholders, cap table management becomes a significantly valuable activity. This is where your legal team or outside counsel becomes even more advantageous to you as a founder. Delegating cap table management to your lawyer can further help you stay on top of critical changes and minimize errors, while enabling you to focus more on building and scaling the business. Creating and maintaining an accurate cap table requires an ability to read, understand and translate legal documents into numbers and formulas. It is best to rely on the expertise of your legal team for this to ensure the most accurate business decisions are made.

We frequently see founding teams make seemingly small mistakes, such as adding an individualname to the cap table before an equity grant has legally been made. This may lead one to believe that more stock is outstanding than is technically the case and can create errors when calculating the number of shares to be granted to subsequent stockholders — or miss making the grant altogether, which can have unfortunate tax consequences for the stockholder and potential liability for the company. Order of operations is critical to legal workflows and itbest to leave the day to day cap table maintenance to your legal team.

5. Decide how much information to share with investors

When it comes to how much cap table information you should disclose to your investors, there isn&t a right or wrong answer. Commonly, providing investors with a summary cap table is a fairly standard practice. That allows investors to calculate their ownership position for their internal tracking and audit purposes. More often than not, investors don&t receive an itemized list of every shareholder or investor in the company. While preferences differ on this point, many of our clients prefer that any company-related discussions are directed to the executive team so they can address and control messaging. Of course, in many instances investors will know which of their peers have also invested, but sharing detailed equity positions, contact information and individual employees& equity stakes is less common.

In Carta, investors generally have portfolio views with visibility into all of their companies. They might send you a request for access to your cap table so they can add you to their portfolio. In this scenario, the summary cap table is the most common approach people default to for the investors. If an investor feels strongly about receiving detailed cap table viewing privileges, they can make their case to the company, which may consider the request on an individual basis.

Major investors will typically have specific, private contractual rights to get regular financial statements and cap table updates. They might even have a representative who is a board observer or board member, in which case, they will have access to the information they want, as agreed to in the equity financing paperwork.

6. Choose how much to share with employees

Understanding the appropriate levels of information about your cap table to share with employees is another top consideration for founders. The key to this is determining the balance that you, as a founder, feel comfortable with in terms of employer transparency.

Some founders choose to be transparent about their cap tables and others opt not to disclose much and provide equity information on a need-to-know basis. The important part here is determining how you can best use the cap table to help your employees understand what they need to know.

For example, employees with equity want to understand what their payout is if the company sells. Regular communication or resources that provide employees with access to their holdings and options is a great approach to help motivate employees and improve talent retention, but can have unintended consequences.

For example, most companies will have their common stock valued after each round of financing. Some founders will want to share this number with the team so that people can understand that their stock is appreciating. That is very exciting and motivating — so long as everything is going well. However, if the stockappreciation is not meeting the teamexpectation (whether reasonable or not), then providing that information can significantly decrease morale. For this reason, the vast majority of companies choose not to disclose this information to the broader team.

Get proactive with your cap table

Your cap table should be well-managed, well-understood and up-to-date. Fortunately, the management process doesn&t need to become just another headache: With the proper considerations, communication, resources and ownership, you can put the correct processes and legal team in place efficiently, and effectively manage your cap table so it continues to help you scale your business — rather than slow it down.

Sample cap table

This table represents a simple cap table showing a hypothetical breakdown of seed preferred stock, Series A preferred stock, common stock and the available option pool.

All content presented herein is for informational purposes only. Nothing should be construed as legal advice. Transmission and receipt of this information is not intended to create, and does not constitute, an attorney-client relationship with Atrium LLP. There is no expectation of attorney-client privilege or confidentiality of anything you may communicate to us in this forum. Do not act upon any information presented without seeking professional counsel.

Koan, a three-year-old online platform that aims to help teams achieve their objectives and stay engaged, has raised $3 million in seed funding led by Uncork Capital and Crosslink.

Koan, co-founded and led by CEO Matt Tucker — who previously co-founded Jive Software, an outfit that made social software for businesses and went public in 2011, then sold in 2017 — is trying to set itself apart from the many other performance management tools in the world by catering less to HR departments and targeting instead the chief operating officer or chief of staff.

Though these individuals today rely heavily on emails and spreadsheets — static products that can slow down execution — Koan tries to make them more efficient by providing them with a dashboard that makes it easier to track goals, provide feedback and execute other people-management tasks.

The company is also targeting leaders of small to mid-size companies. The broader idea is to help them with goal management, and to make it easier for them to make progress against their own metrics and goals.

Koan, which integrates with a wide number of third parties, from Salesforce to Slack, employs just 10 people at this point and is based in Portland, Ore., though Tucker works from Palo Alto, where, interestingly, he and his wife also operate a company called Blind Tiger Ice.

Inspired by their international travels to upgrade in some way their local dining (and drinks) experience, the couplenearly two-year-old company is becoming known in some tech circles for its &high-quality cocktail ice,& as Tucker describes it. Among its customers: Netflix, Facebook, Google and the world-famous Yountville, Calif.-based restaurant French Laundry.

Every once in a while, too, says Tucker, his worlds collide. Recently, for example, the venture firm CRV called Blind Tiger to order ice for a party it was throwing. The portfolio company it was celebrating: Iterable, a growth marketing startup and also a Koan customer.

Koan has now raised $5 million. Earlier investors include the Webb Investment Network, SV Angel and Spider Capital, all of which participated in the companynewest round.

Above, left to right: Co-founders Matt Tucker and Scott Campbell, an early salesperson at Jive Software.