Equity Expert: A Podcast from the NASPP Cap Tables & Investor Perception
May 6, 2024
Discover the pivotal role cap tables play in fundraising and investor trust. Hear about the impact of equity compensation on motivating employees and aligning their goals with the company's vision. Delve into the complexities of managing cap tables in both private and public companies, and understand the potential pitfalls, including dead equity and founder dilution. Learn best practices for cap table management to enhance funding opportunities and ensure a seamless exit strategy.
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Episode notes
Dead Equity Red Flag
- A common red flag for investors is dead equity, where a founder with significant equity no longer contributes.
- This raises questions about the company's history and the remaining founders' commitment.
Equity Allocation Strategy
- Early-stage cap tables should reflect future contributions, not past work.
- Prioritize equity for those driving fundraising and long-term growth.
Cap Table Derails Funding
- An early-stage company nearly secured funding but lost it due to unexplained equity holders on their cap table.
- This triggered deeper due diligence, revealing tax and other issues, ultimately causing the investor to withdraw.