[HN Gopher] The Open Cap Table Coalition
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The Open Cap Table Coalition
Author : JumpCrisscross
Score : 66 points
Date : 2021-12-15 14:52 UTC (8 hours ago)
(HTM) web link (techcrunch.com)
(TXT) w3m dump (techcrunch.com)
| somethoughts wrote:
| It's unclear what technical specifications exist for Open Cap
| Table but it looks to be a common file format?
|
| At a technical level, in addition to a common file format, I
| actually think that blockchain technology is a really good means
| of validating edits to the cap table data itself.
|
| The current mechanism for managing a cap table - particularly for
| pre-seed entrepreneurs - are probably something like Carta.com as
| a paid cloud managed offering or worse - some Word doc or Google
| Cloud doc which gets passed around by founders and legal. Think
| Mark Zuckerberg, Eduardo Saverin and Dustin Moskovitz in a dorm
| stage type companies.
|
| What I think would be useful is something more akin to Microsoft
| Excel Spreadsheet maintained with a non-forkable git repo that's
| shared among partners and requires consensus on PRs before merge.
|
| For the record I'm skeptical of cryptocurrencies but bullish on
| blockchain technology (which I see as basically git with
| trust/consensus features built in). Particularly for maintaining
| consensus on documents among semi-trusted partners who need to
| track modifications to the document and who made them.
|
| Also for the record I just finished binge watching Git as
| Blockchain by Michael Perry. So now every nail needs the
| blockchain hammer :) .
|
| https://www.youtube.com/watch?v=k7U-V4EwoP8
| tihomirb wrote:
| I am one of the organizers of this Coalition. We expect to
| publish technical specification in Q1 2022. It will be a github
| repo and include the specs behind the common file format called
| OCF (Open Cap Table Format).
| somethoughts wrote:
| That is great that the format itself will be open sourced.
|
| Long term I think there are some great opportunities for on
| boarding pre-seed technical founders onto the paid platforms
| which utilize Open CapTable Format files by providing some
| guidance on how to use open source tools (editors,
| git/ledger) to edit OCF files, store, distribute and ensure
| consensus among founders and early partners.
|
| The founders can then share the OCF files and distributed
| ledger entries when they eventually need to work with
| established entities who are using the paid SaaS OCF
| offerings (VCs, Legal, Compliance organizations). They also
| would likely graduate to paid SaaS offerings as well.
|
| Sort of the open source git versus GitHub/GitLabs model.
| unabridged wrote:
| >bullish on blockchain technology (which I see as basically git
| with trust/consensus features built in)
|
| Blockchain and smart contracts are the perfect technology for
| managing a company's assets and voting rights, especially for
| startups. Imagine how much lower the risk for investors would
| be if the terms of share creation and dilution where completely
| spelled out in code. Option grants and lockup periods could be
| completely visible. Trading/hedging/derivatives could be
| available for even the smallest companies. Very tiny minimum
| investments could be taken with almost no overhead.
|
| ICOs have the right idea, but they are just 99% scam illegal
| security offerings. An SEC sanctioned version of an ICO that is
| tied to real shares in a company would be a game changer.
| AlexandrB wrote:
| I don't understand why a distributed solution is necessary
| here. Couldn't you just use a database and a git repo of
| stored procedures for share creation/dilution?
| somethoughts wrote:
| A database might be susceptible to tampering, etc. It might
| be simpler to just use the OCF file itself and put it under
| source control/ledger tracking via git.
|
| I think the base level solution could just be an OCF file
| and git with some sort of consensus requirement among all
| partners before a merge to master is allowed.
|
| The key thought is that the OCF file format standard is a
| great start but for sure other features/tooling around the
| format could be interesting to drive adoption.
| pge wrote:
| The cap table is not an official record, merely a presentation
| of data. The stock certificates themselves and the purchase
| agreements (or notes/safes) are the official record. So, edits
| or errors in cap tables (which happen a lot) are not such a big
| issue as to merit the use of a complicated blockchain solution.
| somethoughts wrote:
| Agreed - perhaps blockchain is too buzzwordy.
|
| I'm not thinking something super complicated. Basically
| envisioning a tool that is a fork of git itself with two
| features disabled/tweaked (i.e. disable forking, require
| consensus before PR merge to master).
|
| Probably the hardest part is creating a UX that lawyers can
| understand and trust.
| [deleted]
| sverredanger wrote:
| Where is this open cap table standard published?
| tihomirb wrote:
| I am one of the organizers of this Coalition. We expect to
| publish the first version of the open standard in Q1 2022. It
| will be a github repo.
| Dave3of5 wrote:
| Not sure if this is good or bad. The people involved are big law
| firms and investment companies and such.
|
| The initial medium post has no detail whatsoever.
| appleflaxen wrote:
| What is a cap table?
|
| It sounds like a capitalization table... like a summary of
| existing investors, their terms, and the number of investors +
| shares of each type?
|
| This seems kind of simple; why is it hard to make it standard? (I
| have no doubt there is a reason; just curious to understand it
| better)
| [deleted]
| pottertheotter wrote:
| Yes, cap table is the same as capitalization table. They can
| get very messy as time goes on. You have new investments (from
| both new and existing investors), changes in terms, etc.
| Compound that with the fact that there are a lot of different
| ways you can present the information. So if you're looking at
| one company's cap table, it can take some time to work through
| it and understand exactly who owns what and make sure it's
| correct.
|
| Think of it kind of like being able to access a website's
| information through an API vs having to scrape and parse data
| from HTML.
| rayshan wrote:
| This. A summary spreadsheet isn't so complex, but the
| detailed ledger of past and present stakeholders, securities,
| transactions, etc. get very very long. Spreadsheets don't
| scale after hundreds of securities are issued > converted >
| transfer > repurchased.
| glacials wrote:
| From the article:
|
| > For those unfamiliar with a cap table, it's a list of who
| owns your company's securities, which includes your company
| shares, options and more. A clear and simple cap table should
| quickly indicate who owns what and how much of it they own. For
| a variety of reasons (sometimes inexperience or bad advice) too
| many equity holders often find companies' capitalization
| information to be opaque and not easily accessible.
| cracker_jacks wrote:
| Why is there a culture of hiding cap tables in the first place?
| Seems like some incentive structures need to be fixed before a
| transparent cap table is adopted.
| jalonso510 wrote:
| I think the article is overstating the scope of the coalition a
| bit. If I understand correctly, it's talking about the format
| and transportability of the cap table, but not doing anything
| to change how broadly a company will choose to make the cap
| table available. So not really transparent, but more
| importantly avoiding vendor lock-in.
| lizknope wrote:
| I've worked for 2 startups in the US and the captables were
| private. The employees had no idea who owned how much or what the
| liquidation preferences were.
|
| This post on reddit really opened my eyes about why all your
| stock could still be worthless even after your company gets
| bought for millions of dollars. I suggest that people read it
| before joining at startup in the US
|
| https://www.reddit.com/r/startups/comments/a8f6xz/why_didnt_...
| icedchai wrote:
| I had captable access at my last company. There was so much
| dilution (mainly due to a couple of nasty down rounds), after 5
| years, even the founder's shares were barely worth anything.
| Investors owned 90% of the company, founder 8%, employee's
| maybe 2%.
| jrudolph wrote:
| Is this a US specific problem? In Germany companies need to
| maintain cap tables in a mandatory public registry
| (Handelsregister). You can request any company's records against
| a small fee (which in fairness I consider very backwards, could
| be more open). There are some third party providers like
| NorthData making this data available publicly as well.
| gumby wrote:
| In the US only public companies need to provide this info (and
| I believe only for shareholders over a certain percentage).
|
| Private companies' operations are, well, private.
| lorey wrote:
| As an example for the non-Germans here, here's N26:
| https://www.northdata.com/N26+Bank+GmbH,+Berlin/Amtsgericht+...
|
| note: it shows management not ownership
| rayshan wrote:
| Thank you for this! Very cool example of what can be built on
| top of OCF.
| tihomirb wrote:
| I am one of the organizers of this Coalition. for the first
| version of our open format we're focused on American Delaware
| Corp C's - most common entity that VCs invest into.
|
| we announced a number of new Coalition members yesterday who
| also would like to see this sort of standardization outside of
| the US. we're focused on the US atm
| hikingsolomon wrote:
| Hi - I'm the author of the TechCrunch piece and I've lived in
| Berlin. It's very different in the US and Canada, are are most
| regulatory things (#V*V#)
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