Startup Funding Espresso -- How to Clean up the Cap Table
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. If you have too many former founders with stock who no longer work at the startup, then you may need to clean up your cap table.\xa0 Due to a lack of a vesting schedule, those founders took substantial tranches of stock without staying long enough to build meaningful value. If this stock amount is significant, then it will hurt the business later. That stock needs to be set aside for future employees or to reduce the impact of dilution from future investors. To resolve this issue, go to the departed founders and offer to buy them out. In the negotiations, you can offer them a price which matches their contribution. If they decline, then you can threaten to shut the business down in which case the stock will be worthless. Since you\u2019ve built a business, they will recognize this as a real threat because you can start a new one without them. The old saying in the startup world is, \u201c10% of something is better than 100% of nothing\u201d. Most founders will recognize they have something of value and will not want to see it go to zero. It\u2019s important to clean up the cap table early on and not let it persist. \xa0 Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today. ___________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0 For Feedback please contact info@tencapital.group\xa0\xa0 Music courtesy of