Accounting
Surviving the venture drought created cap table chaos
After more than two years of
It seems that guerilla fundraising, along with the normal chaos of crises and opportunities requiring immediate founder attention, frequently leads to a lack of accurate recordkeeping for the company’s cap table. Companies will need to remedy that situation if they want to have any hope of raising new venture capital.
But they also can’t show up with a cap table that looks like a
A dirty cap table is an understandable phenomenon that regularly occurs in fledgling companies where innovation, revenue growth and customer acquisition take precedence over keeping close tabs on funding rounds. It’s a mistake entrepreneurs make time and time again. But that mistake
So, founders who successfully wheedled needed capital from various sources in various forms and on divergent terms will now need to turn their attention to an urgent cap table cleanup. If they don’t, they’ll find their options for raising new capital on acceptable terms are severely limited.
Preparing and executing a cap table cleanup is almost as much fun as surviving two years without additional capital. It’s not a task that’s particularly easy to fix in the rearview mirror, either. It’s distracting and time-consuming, but it can and must be done.
Here are the major steps:
- Get all equity and capital-related documents in one place. Stock purchase agreements, option grants, SAFEs, convertible notes, term sheets, everything. Version control is important to ensure that the actual governing document is the one being compiled.
- Make sure every equity issuance is reconciled with board minutes, resolutions and written consents.
- Categorize all equity raises, taking care to separate common stock, preferred stock, options, warrants, SAFEs and convertible notes. Record all details for each type of equity: issue date, number of shares, price and any specific terms or conditions.
- Check all ownership information and update records — shareholder names (including founders, employees, investors and advisors) — and be sure the share numbers are accurate.
- Lay out the variables in the equity structure by overlaying vesting schedules for founder, employee and affiliated party equity. Also, make sure all convertible instruments are tracked with their conversion terms and schedule.
- This is the time to implement cap table software, like Carta, Pulley, Shareworks and others. Empower a qualified individual or cohesive team with the duties of overseeing a well maintained cap stack with responsibility for creating and maintaining efficient workflows and controls that will deliver the results that keep you on track. Creating the foundation for future growth and complexity and are worth the investment for a growing company.
- Get help where needed. No founder can spare their key team members for an extended period to perform what is in essence a heavily clerical and analytical task. A company’s accountants and outside counsel can usually make much shorter work of the task.
- Communicate with investors and evaluate any obvious challenges to a fundraising process. Are approvals awkward and time-consuming? Do you have too many small investors? At least come to the process armed with the knowledge of where the challenges will be. Also, examine any disproportionate voting rights that could become hurdles to new funding.
Nailing down the cap table in many ways is the documentation of a company’s financial narrative, which in turn becomes an important element in the fundraising process.
Having a clean cap table is a statement of operational competence and managerial transparency. It says that adults are in charge and future investors and their capital will be treated with the same level of respect and professionalism.
It’s been a long, hard road for startups these past few years, and in some ways has led to permanent changes in venture capital investing. Companies that can demonstrate traditional capabilities like operating efficiency, financial control and tight business planning alongside their innovative technology development are being rewarded by investors. A squeaky clean cap table signals readiness to take investors’ capital and earn them the returns they deserve.
Aprio, a Top 25 Firm based in Atlanta, has acquired JMS Advisory Group, a firm that specializes in unclaimed property compliance and escheat process development, also based in Atlanta
Financial terms of the deal were not disclosed. Aprio ranked No. 24 on Accounting Today’s just released
JMS was founded in 2006 and helps clients mitigate risk and capitalize on opportunities through managed unclaimed property compliance. The team includes attorneys, CPAs, CFEs and others.
JMS has a wide range of clients, including enterprise companies, financial institutions, credit unions, insurance companies, hospitality and health care organizations.
“As Aprio continues its rapid growth, we are committed to expanding our services to meet the evolving needs of our clients,” said Aprio CEO Richard Kopelman in a statement Tuesday. “The addition of JMS gives us the opportunity to continue strengthening our position as a future-focused advisory firm. JMS’s focus on escheat management and asset recovery not only enhances our current capabilities but also allows us to deliver even more impactful solutions to help businesses navigate complex compliance challenges.”
JMS president and CEO James Santivanez is joining Aprio as a partner and provides guidance to clients on unclaimed property and state and local tax issues.
“We created JMS to make an impact nationally in the unclaimed property consulting industry, and I’m proud of our nearly 20-year history of helping clients mitigate risk and capitalize on opportunities resulting from accurate and properly managed unclaimed property compliance,” Santivanez said in a statement. “Joining with Aprio takes us to the next level, allowing us to build upon our success while providing even greater value to our clients. This is an exciting next step in our journey.”
JMS founder and director Sherridan Santivanez is also joining Aprio as a partner. He specializes in representing clients before state enforcement authorities and managing complex audits and voluntary disclosures for some of the world’s largest companies. She provides strategic guidance on audit preparation and navigates interactions with state and third-party auditors.
Aprio received a
The American Institute of CPAs and the National Association of State Boards of Accountancy are asking for comments on their proposal for an additional pathway to CPA licensure through
The AICPA and NASBA proposed the
The UAA changes would:
- Enable states to adopt a third licensure pathway that requires earning a baccalaureate degree with an accounting concentration, completing two years of professional experience as defined by Board rule, and passing the Uniform CPA Examination;
- Shift to an “individual-based” mobility model, which allows CPAs to practice in other states with just one license; and
- Add safe harbor language to ensure CPAs who meet existing licensure requirements preserve practice privileges.
The proposals come as several states are already moving forward with their own changes, including
The updates reflect feedback gathered during a late 2024 exposure draft period and forward-looking solutions being advanced by state CPA societies and boards of accountancy to increase flexibility for licensure candidates while maintaining the integrity of the CPA license.
The AICPA and NASBA are asking for comments on the proposed changes by May 3, 2025. They can be submitted through this
The UAA offers state legislatures and boards of accountancy a national model they can adopt in full or in part to meet the licensure needs of each jurisdiction.
The proposal would maintain the current two pathways to CPA licensure:
- Earning a post baccalaureate degree with an accounting concentration, completing one year of professional experience as defined by Board rule, and passing the CPA exam; and,
- Earning a baccalaureate degree with an accounting concentration, plus an additional 30 semester credit hours , completing one year of professional experience as defined by Board rule, and passing the CPA exam.
Small business employment held steady last month, according to payroll company Paychex, while wage growth continued below 3%
The
“Our employment data continues to show moderate job growth and wage growth below three percent,” said Paychex president and CEO John Gibson in a statement Tuesday. “The consistent long-term trend we’re seeing is a small business labor market that is resilient and stable with little job movement among workers. At the same time, small business owners are optimistic about future business conditions despite uncertainty about how to adapt to a rapidly evolving legislative and regulatory landscape.”
The Midwest remained the top region in the country for the ninth consecutive month with a jobs index level of 100.54. Seven of the 20 states analyzed gained more than one percentage point in February, led by Texas (up 2.11 percentage points).
Phoenix (101.92) increased its rate of small business job growth for the fourth month in a row in February to rank first among the largest U.S. metros.
Construction (3.29%) regained its top spot among industries in terms of hourly earnings growth in February, followed closely by “other services” (3.27%) and manufacturing (3.21%).
The pace of job growth in manufacturing gained 2.39 percentage points to 99.52 in February, the industry’s biggest one-month increase since April 2021.
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