Founders - The Impact of a Disorganized Cap Table 🚩

Founders - The Impact of a Disorganized Cap Table 🚩

Managing your cap table is a crucial but often overlooked aspect of being a founder. Proper bookkeeping here is essential. Common issues with poorly managed cap tables include:

🚫 𝗗𝗲𝗮𝗱 𝗘𝗾𝘂𝗶𝘁𝘆: Previous founders who have left but still retain equity, despite no longer contributing to the company.

🚫 𝗡𝗼𝗻-𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗶𝗻𝗴 𝗦𝘁𝗮𝗸𝗲𝗵𝗼𝗹𝗱𝗲𝗿𝘀: Organizations, advisors, or 'non-capital participating' angels granted significant equity without vesting schedules or performance requirements. Often, these arrangements are based on verbal agreements.

🚫 𝗘𝘅𝗰𝗲𝘀𝘀𝗶𝘃𝗲 𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗗𝗶𝗹𝘂𝘁𝗶𝗼𝗻: Founders diluted by a prior 'lead' investor, typically an angel, who set the round's valuation without adequate market references and cannot provide follow-on capital.

Venture Capital is a game where details matter. A clean, well-structured cap table builds investor confidence. 

For cap table management, consider using software like Carta.

Need help? Reach out.  

- Gerald 

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