Your Cap Table is Sending Messages to the Outside World
Make sure it sends the ones you want
The design of your cap table sends messages both to future employees and to investors. It’s unavoidable.
There are obvious messages, like:
- Which founder wears the pants in the relationship?
- How generous were the founders in distributing equity?
- How disciplined have the founders been in fundraising?
Plus many more, interesting psycho-analysis questions you could derive from how the cap table is split.
A plethora of articles have been written on this topic, and I do not intend to add to them.
My intention with this article is to discuss the optics of the actual design of your cap table. I share three interesting questions that will play a tangible role in your company’s future (at least they have in mine) and took brain cycles to correct or resolve. This article outlines the results of those cycles.
How many shares do you want to authorize?
Quick primer — authorized shares are the total number of shares a company states in the articles of incorporation it will allow to be issued. An issued share is one that has been sold (or granted) to…
