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Using a Simple Cap Table Can Increase Your Equity Leverage
A simple cap table is useful and beneficial for:

How it works: For many investors, they are often confronted with the dilemma of whether to buy stocks or cash equity (commonly referred to as EFT's.) To be more specific, you can make money from stock options trading. This is possible because of the existence of "call" and "put" options. These options essentially give you the right to purchase or sell a particular underlying security at a precise date (known as strike price.) On the other hand, a simple cap table gives you the ability to do the same thing with respect to stock options. Thus, by making a simple cap table you can have a clear overview of your entire investment portfolio.

Why use a simple cap table? Many investors do not realize the potential profit that can be made through the use of this type of investing tool. With a simple cap table, investors are able to maximize the return on investment. This is because with a diluted stock option strategy, investors can dilute their investment into a greater amount of shares, which allows them to reap greater dividends. Diluted shareholder strategies are particularly popular with institutional investors and capitalized small-cap investors.

I recommend using a simple cap table template. Using a template can provide you with the maximum amount of flexibility and simplicity when dealing with these types of investment issues. There are numerous types of these types of plans. In this case, let's look at two of the most popular types of plans used by institutional investors: The Dividend Reinvestment Plan ("DRIP") and the Common Stock Option Trading ("CSOT") schemes. I will discuss these two particular investment plans in subsequent articles.

One of the main advantages to using a simple cap table software is that it provides the investor with incredible control over the strategies that are employed. In today's market, many investors are experiencing trouble identifying profitable investments. For example, many retail investors are unable to consistently turn a profit. This is because they are investing in businesses that are experiencing a "honeymoon" phase. The DRIP and CSOT strategies allow investors to receive yields that are consistent year-in-year-out. Now, let's look at some of the pros and cons associated with this type of investing option.

Perhaps the biggest pro that can be derived from using a simple cap table is the ability to diversify. Equity stakes can vary tremendously between various companies. When you invest in a company that is experiencing significant growth, you can dramatically increase your equity stake without having to pay significant cash out. This can allow investors to create a portfolio of growth equity stocks while paying attention to the specific financial performance of the individual companies.

Another pro associated with cap tables is that they give you an opportunity to determine whether or not the company that actually possesses the security is really a good investment. You can do this by looking at the company's market value and earnings per share (EPS). If you see a bad economy, it is most likely a bad business buy. On the flip side, if you look at the company and see that it is growing, it may very well be a solid buy. It all depends upon the company and what it is offering. If you have the right kind of software, you can actually conduct the analysis without ever looking at the company's balance sheet.

Finally, many individuals are concerned that using a cap table will reduce their ability to obtain additional equity financing. The reality is that there are many companies out there that issue equity and do not use any sort of cap table. They are able to do this because they are profitable and they are not growing. If you have a properly developed cap table and properly selected securities, you can actually increase your leverage with the issuing stock while simultaneously reducing the amount of money that you need to borrow from a private lender.