Your company’s cap table matters — it’s who you’re making wealthy and powerful in the world

Squad’s $5M seed round was very diverse: yours can be too!

Esther Crawford
All Raise


Now that we’ve announced our seed round was led by Hayley Barna, partner at First Round, I can talk about something I’ve become very passionate about — our cap table.

Shortly after launching Squad it was obvious we had hit on something magical so I decided to put a fundraising process together to fuel our product development and growth.

But as I started lining up investor meetings I realized I needed a shortcut to figure out who I wanted to join the company, so I came up with two key questions I scored investors on after every meeting:

  1. What unique value, experience, or network do they provide to accelerate us?
  2. Do I believe the world will be better off if this investor becomes richer and more powerful?

(And yes, I turned down multiple investors simply because I couldn’t get to an enthusiastic yes for #2.)

The truth is, I wasn’t always this confident or clear in what I was looking for. When I first met with investors I’d get super nervous because I was worried about what they would think of me or my moonshot plan to build a new social app.

Then one day an investor said he was interested and my gut reaction was, “Oh god… I do not want to work with him for the next 10 years.”

That’s when I realized I had completely confused the situation — I was in charge, not the VCs. It was a simple mental switch but it profoundly changed the experience of fundraising for me. That’s when it became more like a game than a chore.

“In every other asset class, it’s the manager who picks the securities. In venture it’s inverted. It’s the security that’s picking the manager. Sequoia didn’t pick WhatsApp. WhatsApp picked Sequoia.”

Alex Bangash on The LP Perspective: Venture Stories

Why we should talk about the cap table more

In its simplest form, the cap table is simply a ledger that shows who owns how many shares in a company.

But in reality, the cap table is more than just a spreadsheet of securities — it also sends subtle but powerful signals to potential future investors. In small ecosystems like tech and venture, individual VCs and firms have reputations that they bring along to your cap table — and thus get attached, for better or worse, to your company.

Not every startup should be venture backed — but for those that are — fundraising rounds are major milestones because they provide much needed cash for the business to grow as quickly as possible. VC funded companies prioritize speed and growth over efficiency in an effort to capture a massive market, and so they need a lot more capital to do it.

Although there are a handful of entrepreneurs who can raise money off their name alone, for the vast majority of us, fundraising is an awkward and emotional process — so it’s no wonder that many want to get it over with as quickly as possible.

But here’s the thing — you can’t easily get rid of your investors, so founders have to close quickly but choose wisely.

Wealth inequality starts with equity inequality

Gone are the days where tech founders can feign ignorance about their role in shaping society. Instead, we need to plan for success — which means:

  1. The culture we create with the incentives we build into our platforms will have real consequences for people’s safety and wellbeing.
  2. The people on the cap table (especially our investors and early employees) will potentially be rewarded with generational wealth. And along with that wealth comes enormous power. The kind of power that influences local, national, and even global affairs.

In startups, wealth is created through equity ownership on the cap table. According to data from Carta and #ANGELS, women only own 9% of employee and founder equity in Silicon Valley. Men own the other 91%.

So when women and people of color are missing from the cap table they are missing in the place where it matters most — equity ownership.

When so much potential wealth creation is at stake it’s on us as founders to thoughtfully choose who we want our life’s work to empower.

Regardless of how you feel about his politics, Peter Thiel has the ear of the president and is able to speak at national conventions in large part because of his connection to Facebook as an early investor and current board member.

Peter Thiel at the RNC in 2016 — via Time

In fact, 6 of the 10 richest Americans today became billionaires by creating successful tech companies.

When Jeff Bezos started Amazon in 1994 he had no way of knowing his net worth would someday soar to over $160 billion — or that each of his original 22 investors’ shares would be worth up to $7bn today — but he believed the idea had the potential for massive upside, which is why he sought outside investment to get it going.

The bigger the exit, the more power created

One of my primary jobs as the CEO is to make sure we don’t run out of money —but I also need to be deliberate and strategic about who I allow to invest in the company because I want to work with ethical people who share my values, broadly speaking.

“Once you’ve been in business long enough, you will realize how much of it is about trust. It’s about trust because you want to compound interest. You want to work with trustworthy people for long periods of time without having to reevaluate every discussion or constantly look over your shoulder.”

Naval Ravikant on his podcast episode “Being Ethical Is Long-Term Greedy”

As I considered each investor, I imagined what it would feel like to know that at our IPO each of them would be that much richer and more powerful because of us — Who would they invest in next? What causes might they fund or fight?

It’s an interesting and important exercise to continuously reconsider the long-term consequences of what we’re building and how the world might change when we succeed.

It’s even better if you do it with people you trust because they’ll help you see around corners.

What our cap table looks like today

I’ve often wished companies publicly showed who was on their cap table. It’d be a small yet powerful way of holding founders accountable at each funding round to at least meet with a more diverse set of investors — potentially even creating space for smaller funds and newer angel investors to participate in the round.

To help create the world I want to exist, I’m showing every investor who is currently on our cap table.

1) YC is huge so I just included our group partners. 2) For small funds I included both partners if we interact with both partners.

Of the investors we work with, 30% are women and 30% are people of color — so pulling together an insanely talented and diverse roster of investors who you want to win alongside your team is definitely possible.

You just have to want to do it.

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Esther Crawford
All Raise

Sleeping in. Ex-Product at Twitter. Life story: “Nevertheless, she persisted.” Optimist. Technologist. Wearer of many hats.