Founder Friday: What Cap Tables Tell Investors (SVB)
If you’re a founder and haven’t read Silicon Valley Bank‘s “How to Tell the Story of Your Startup’s Cap Table,” you need to pause and look at this 5-minute read. Why? Well, here are a few high-level points they expand on…
- Your cap table has signals of interest to investors (ex., when you seek financing, hiring, or you might tip your hand concerning potential exit strategy, if founders have enough ownership, if there is a large enough employee option pool, etc.).
- Investors prefer seeing equally distributed ownership among founders, or if there isn’t that all founders are genuinely comfortable with equity splits.
- They encourage using IOUs for founder investments vs. equity (check out this article on SAFEs from Silicon Hills Lawyer).
- They look at who is part of your cap table and the value those relationships can add.
- Investors look for errors, so quadruple-check your formulas and results.
SVB is always sharing fantastic info for startup founders. Their Trends & Insights section is where you’ll find all sorts of gems like this article.