Cap Table: The Bottom Line

  • Consistency of the cap table according to the stage of the startup: Look for investors according to your stage who will add value and allow you to reach a subsequent stage.
  • Consolidation of the cap table: Keep it clean and with a reasonable number of investors so that its management is efficient. As you raise additional capital and have oversubscribed rounds, you could encourage secondary rounds of small investors such as angels in order to consolidate your investor base prior to subsequent rounds of expansion.
  • Be mindful of the dilution: If your startup is successful remember that you can have multiple rounds of capitalization, therefore, try not to dilute yourself too much in the first rounds and efficiently manage the resources you are raising.
  • Share structure: Raising multiple rounds of capital granting different rights to investors in each one of them leads to having different classes of shares. Try to minimize the classes of shares by trying to favor the fact of having only common shares and a single class of preferred share.
  • Know the dynamics of the Cap Table: The Cap Table requires knowledge and expertise to carry out the stock participation calculations of current investors through the exercise of its Pro-rata with respect to new investors. Learn to calculate them and get advice from someone who has the experience, remember to calculate the Pro-rata first and the number of actions last.
  • Be careful with convertible instruments: Sometimes entrepreneurs forget that convertible notes and SAFEs also convert at some point in time, perform the necessary calculations so that you do not find yourself in the dilemma of having a higher dilution due to the fact of not having converted the notes and SAFEs in a timely manner.
  • Option Pool: Also, remember that every startup needs a pool of shares in order to attract and retain better talent. Consider at least a 10% shareholding for this point that you can constitute before or after the same round that will bring the result of taking the dilution or sharing it with the rest of the investors. You can also resupply it to have 10% available again at the time of constituting a new round.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
ACV

ACV

ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.