The Five Biggest Cap Table Mistakes and Ways to Avoid and Fix Them

Inthe exciting world of startups, we often get swept up in innovative ideas, growth strategies, and disruptive technologies. However, behind the scenes, there’s an unassuming document that quietly plays a crucial role in a startup’s journey: the capitalisation table, or “cap table”. This simple spreadsheet, outlining who owns the equity in a startup, can dramatically influence a company’s potential for success. It’s not just about numbers; it’s about aligning the company toward growth through motivating executives and enabling high-quality decision-making. It’s easy for decisions made early in the company’s journey to have a significant negative impact on the cap table. In fact, we regularly see companies that have great tech and a great team tackling a big important problem, but where the capital structure is not at all aligned with their future success. Those situations suck for everyone involved. Existing investors are less likely to be left holding onto really valuable stock in the long run; the management team may feel undervalued and experience high churn; and new investors may be scared off or require onerous terms or recapitalisation to invest. Ultimately, it limits the potential of the company. Let’s dig into each of these areas, understand why they are important, what “good” looks like, and the mistakes that can cause you headaches in the future. <a href="https://medium.com/extantia-capital/the-five-biggest-cap-table-mistakes-and-ways-to-avoid-and-fix-them-c7a678a7f8d7">Visit Now</a>