If you are founding a startup or participating in one at an early stage, there is one topic that is often underestimated, but which can make the difference between success and failure in the long term: the Cap Table Hygiene. This refers to the conscious and structured handling of the distribution of company shares - from foundation to subsequent financing.
What is a cap table?
A Cap table (Capitalisation Table) is essentially a table that shows who owns how much of the company. It clearly lists founders, investors and employees with shares, options or convertible loans - including the respective amount of the investment. This table becomes the central document for the first investor meeting at the latest.
Why is cap table hygiene so important?
Many start-ups get into trouble early on because they allocate their shares too carelessly - be it through overly generous founder allocations, hasty investor deals or chaotic employee participation programmes. A "dirty" cap table can:
-
- Deter investorsbecause it indicates unclear ownership or potential for conflict.
- Demotivating new employeesif no more fair options are available.
- Making later financing rounds more difficultif redistributions or dilutions become necessary.
Typical pitfalls - and how to avoid them
1. unequal distribution of founders
Shares are often divided equally between founders (e.g. 50/50) without taking into account their actual roles or long-term contribution. Such a structure can lead to tensions - especially if someone leaves early.
Tip: Have honest conversations about the expected contribution of each founder - and Vesting-rules.
2. too early disposal of shares
Some founders give too many shares to advisors, angel investors or service providers too early - often out of uncertainty or because they don't know how to compensate others fairly.
Tip: Use phantom shares, small advisor options or clear KPIs before giving substantial equity.
3. no or incorrect ESOP structure
A Employee Stock Option Pool (ESOP) is essential for attracting and retaining top talent in the long term. However, if it is set up too late or is too small, you will lack flexibility.
Tip: Plan an ESOP of 10-15 % early on - preferably pre-moneyin order not to dilute existing shares unnecessarily.
4. lack of documentation and transparency
Without proper cap table software or structured documentation, errors can quickly occur, especially when convertible loans turn into equity or employees leave the company.
Best practices for cap table hygiene
-
- Regular care: Keep the cap table up to date after every financing round, contract amendment or new investment.
- Legal protection: Leave all agreements (vesting, options, Convertible loan) - especially before the notary appointment.
- Internal transparency: Creates awareness in the founding team and among key people about the long-term influence of cap table decisions.
- Play through scenarios: Simulates dilution, Exit-scenarios and ESOP effects to avoid any nasty surprises.
Conclusion
A clean cap table is not a bureaucratic nice-to-have - it is the basis for trust, investor interest and scalability. Creating the right structures early on saves expensive corrections, disputes and cancelled financing later on. So: Maintain your cap table like your business plan - from day 1.
Download your free Cap Table Cheatsheet now! Get the most important tips and checklists at a glance - ideal for keeping control of your company shares right from the start.