The composition of a cap table can tell a lot about what the company can do, who has parts of the company, and who makes the company's major decisions. Hence, it is vital to understand your responsibilities towards your company and how specific changes can impact the business, from the start of the business till your exit. Make sure to update the cap table every now and then if there is a new round of financing or even if you are about to issue more share options. Despite all the straightforwardness of the document, many tend to make mistakes. One major mistake is that many entrepreneurs still rely entirely on spreadsheets to manage their cap table, which can make everything disorganized and complicated. When a company gets funding and grows, the current spreadsheets available are not enough for keeping the cap table proper, especially among a lot of people simultaneously.

1. Cap Table Mistakes
Companies Should Avoid
Maintaining a cap table is an essential part of
the company operations that the owner has
to follow to make better financial decisions

2. Poor record keeping
Fail to negotiate for
exercisable options initialy
Negotiating the option
pool at pre money
Mispriced option grants
Failing to seek professional
advice

3. Handshake deals
Completely vested founder's
shares
Failing to analyze the
impact of financing round
Utilize your options too late
Raising more than required
capital in the initial stage