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**Convertible Notes
Silicon Valley Bank Data Project (view source)
Revision as of 16:06, 1 March 2011
, 16:06, 1 March 2011no edit summary
The CapMx data is a electronic collection of firms' capital tables. In theory it contains the fully detailed capital structure for each firm in the database. The bank works with various law firms, including [http://www.orrick.com/ Orrick] and [http://www.gunder.com/ Gunderson], who 'stored' this data in Excel sheets, as well as venture capital funds and the companies themselves (who 'stored' this data on paper). The bank responded to this situation by creating and maintaining the CapMx database, to store the data on behalf of their various clients, and to facilitate various transactions on this data.
You can fill out a [http://www.svb.com/Products-and-Services/SVB-Analytics/capmx-demo-equity-tracking/ form to view a demo] of the [http://www.eprosper.com/ online interface] into the CapMX data (though I had problems playing with it [EJE]). This online interface provides users with access to their data, and allows the users to conduct a limited number (and range) of transactions on it.
The database can accomodate data on the the authorized capital of the firm, all transactions performed on this capital, individuals/entities associated with this capitaland/or these transactions, and details on the firm itself. However, there is little to no incentive for the firms or representatives of the firms to fill out any data beyond that which is required to record and use the capital structure at a particular moment in time.
The original capital structure of the firm is inputted by staff at SVB. There is an 'upload template' to guide the staff in this process, and data is sourced from the certificate of incorporation (or certificate of authorization for later issues). However, the input suffers from a number of issues:
*Preferences may not reflect the most recent series
*Preferences are often recorded as a static value (taken from the certificate)
*Likewise, the conversion ratio is often recorded as a number, rather than an formula (1:1 conversions are less problematic)
*There may be issues with the recording of preference priorities, participation, and payment-in-kind clauses
*It would be highly problematic to record capital structures for firms organized as LLCs or LPs (or anything other than a C-CORP or S-CORP).
Records are updated in two ways:
*At every financing round the bank updates the underlying capital structure
*In By conducting transactions on the underlying structure through the online interface the structure can be automatically updated. (Note that in order to conduct a transaction on this datathe capital structure, the data components of the capital structure relevent to the transation must be up to date. Thus transactions can act to validate the underlying structure data.) '''A full history of every transaction ever conducted is maintained throughout the firm's lifetime.''' *Firms may conduct transactions related to:
**Stock
**Options
**Warrants
**Convertible Promisory Notes (CPN)
**SPN
**Rollbacks
Transactions might include:
*Issuances
*Redemptions
*Cancellations
*Exercisings
*Repricings
Firms may also examine issues for [http://taft.law.uc.edu/CCL/33ActRls/rule701.html Rule 701 Compliance], conduct (one-stage) anti-dillution analysis, conduct (one-stage) liquidation preference analysis, compute the firm's fair market value, and build a wide variety of reports on the capital structure or transactions conducted upon the capital structure. (Note that by "one-stage" I mean that the data can be taken from the system and a single hypothetical analysis can be performed, and that it is not possible to temporarily store the changed capital structure that would result from the hypothetical analysis in order to conduct further hypothetical analysis. This does limit the usefullness of the tool with regard to simulation of the capital structure over time, such as for an exit analysis. SVB have recognised this limitation and are considering potential improvements [EJE]).
The database contains 4032 firms records, of which 924 are 'blanks' which are created when people test or demo the system. There are additional firms named "X - In Conversion", "X - Expensing Only", and "X - Dissolved", that should be discarded. Thus there are a little under 3000 active firms on the system. Of these only 339 have completed some information on the firm beyond that which is required to maintain and use a record of the firm's capital structure. The database uses its own IDs (seperate from the CIF IDs mentioned above), but the firm name's are recorded directly from the Articles of Incorporation and should be sufficient to fully identify the firms.
The database runs on an Oracle platform, but the actual structure of the data in the database was not discernable. The R&D group of SVB is responsible for the operation and maintainance of the underlying data. However, it seems very likely that a SQL script could pull all relevant data into a single flat file for analysis.
