Equity Expert: A Podcast from the NASPP Founders Mistakes: Cap Tables
Apr 5, 2024
Chris Hoffman, founder of Equity Admin Co., specializes in cap table management for companies of all sizes. He shares insights on common pitfalls founders face, emphasizing proactive equity management to avoid complications. Hoffman highlights the importance of accurate equity distribution, especially during public offerings, and stresses effective communication with investors about equity conversions. He also discusses the necessity of assembling a skilled legal team to navigate equity challenges, showcasing how organization in cap tables can drastically benefit startups.
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Proactive Cap Table Management
- Be proactive with your cap table and update it with every equity-related event.
- Anticipate upcoming events like board approvals and fundraising rounds.
Costly Cap Table Audit
- A company approaching IPO needed a costly and time-consuming cap table audit.
- The audit involved multiple parties and cost around $80,000-$90,000 in total.
Incorrect Conversions
- A company discovered incorrect conversions on convertible notes and SAFEs during an audit.
- This required legal counsel involvement and potential cap table reconstruction from two years prior.