Who Should Have Access to the Cap Table and Down Rounds

Who Should Have Access to the Cap Table and Down Rounds

January 30, 2020 by investor

Who should have access to the cap table in a startup?

The Cap Table which shows the ownership of each investor and those from the company is reserved for investors, board members, the CFO, and the corporate attorneys.

For employees, you want to create a culture of openness.

Employees and other shareholders get visibility into their ownership but in general they cannot see the ownership of others.

You want to discourage employees buying/selling shares with each other or investors as they should receive liquidity with everyone else.

On another note, what is a down round?

A down round is when a startup accepts an equity investment at a valuation lower than the previous established valuation.

This comes from raising too much capital at too high of a valuation previously.

Those who have a burn rate that is too high or have pivoted to a new business model may be subject to down rounds.

This hurts previous investors, founders, and employees whose options are now worth less.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.