Read the early stage startup FAQ to understand how the cap-table works.
A Cap-table is a financial tool that shows the distribution of shares and ownership percentages among the company’s shareholders. It provides an overview of the company’s ownership structure and is an essential resource for founders, investors, and employees.
Cap-tables can be visualized with or without granted stock options. Including stock options in the Cap-table provides a more comprehensive picture of the company’s equity distribution, which can be useful for investors seeking a deeper understanding of the company’s potential future ownership structure.
A Cap Table is a financial tool that shows the distribution of shares and ownership percentages among the company’s shareholders. It provides an overview of the company’s ownership structure and is an essential resource for founders, investors, and employees.
Cap Tables can be visualized with or without granted stock options. Including stock options in the Cap Table provides a more comprehensive picture of the company’s equity distribution, which can be useful for investors seeking a deeper understanding of the company’s potential future ownership structure.
There are several ways to rectify a distorted ownership structure. One option is to relaunch the company with a new ownership structure, which will effectively change the existing structure. However, this could result in disgruntled former investors who have lost their investments.
Another option is to conduct a significant down round and have the founders invest more than the investors. This option may come with tax implications, especially if the company’s value suddenly increases after the new investment.
The third option is to issue additional stock options to the founder team to dilute the investors’ ownership. While this option may help restore an incentive for the founders, it could also have tax implications and will not effectively change the existing ownership structure since stock options are not real shares.