Cap Table Management & Founder Equity

A messy cap table is the number one reason startups fail due diligence during fundraising. Here's how to structure it right.

Founder Equity Splits

It's rarely a good idea to split equity 50/50 without discussion. Equity should be distributed based on past contributions, future commitment, IP creation, and the risk taken by each founder.

The Importance of Vesting

Never give out equity unconditionally. All founder and employee equity should be subject to a vesting schedule (typically 4 years with a 1-year cliff). This protects the company if someone leaves early.

ESOPs (Employee Stock Ownership Plans)

Investors generally require you to create an Option Pool (usually 10-15%) before funding. This pool is used to incentivize early employees without further diluting the investors immediately.