TLDR:
- Maintaining a clean cap table is crucial for startups seeking investment.
- Investors review the cap table during due diligence to assess ownership structure and founders’ management capabilities.
Mastering cap table management is crucial for the success of startups. A clean and accurate cap table provides investors with a clear understanding of the ownership structure, builds trust, and facilitates informed decision-making. Experts emphasize the importance of honesty and transparency in managing investor relationships, as the cap table reflects the health of the business. Common mistakes to avoid include not updating the cap table regularly and misallocating equity. It is recommended to use cap table management software and consult legal and financial advisors for accurate record-keeping.
