Your Cap Table: If You Get It Wrong The First Time, Will You Be Able To Do It Over?
One of the biggest challenges for startup founders and funders is making sure that the “cap table” (the spreadsheet or table that shows all of the equity ownership capital) is fair among all of the current and future stakeholders.
If you get the cap table right, it doesn’t guarantee that your venture will be successful. But if you get it wrong, it will dramatically increase the probability of problems and may even cause your venture to fail.
During the ideation stage of a venture, allocating founders’ shares can seem a bit like giving out Monopoly money at the start of a game. If there are two co-founders, should the shares be split 50/50, 51/49, 60/40, 80/20, or what?
What if there are three co-founders, or four co-founders? In terms of initial capital to organize the venture, do all co-founders need to pay the same price per share? What if one or more of the co-founders doesn’t have any money to invest?
It’s also different depending on where you are.
Good luck and Godspeed!
Founder of Aery Advisors
Seed Investor, Company Advisor, Entrepreneur, Lawyer