Cap Table Mistakes to Avoid | Eqvista
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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.
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Cap Table Mistakes to Avoid | Eqvista
- 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