IS CAPTABLE (STOCK DISTRIBUTION TABLE) BROKEN?
| Many founders have very good businesses, but get stuck in the capital structure allocation table because of 4 basic mistakes in the image right here.
4 cases where the Captable table cannot invest in founders and should avoid: Figure 1: Founders with less than 80% of voting shares before the seed round. Figure 2: Investors with too much decision and control capacity. Figure 3: Former founders or advisors no longer contribute more than 10% to the company -> Dead shares. Figure 4: Zoo in English is called zoo – That means too many investors in a company do not understand what the company is doing and have difficulty sympathizing with the company when it is in difficulty. |
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“I gave too much capital to some Angel Investors and these potential investors are making things difficult for me. What to do now?”- A Founder asked.
First of all, when CapTable was damaged due to too much dilution Initially, Founders should not approach any new investors before fixing their CapTable.
Here are two options that Founders can think of to fix:
1. Create an ESOP group specifically for Founders. Do This newly created group of ESOPs that existing shareholders will be diluted in.
And existing shareholders need to understand that if any new investment is brought into the company, it will not only benefit for the startup but also for all shareholders, as their wealth increases.
2. If the founder realizes that he has given away too many shares of his company to investors or advisors, those who are no longer contributing heavily, you might consider buying back some of that ownership.
However, agreeing on a fair price for this buyout can be difficult if We do not have a clear agreement. Typically, these buybacks can only occur at a stock value lower than the value of your company’s stock in which the most recent investment round was invested.
There are many cases where you have never called for capital so you do not have an accepted valuation, so you should agree to revalue the company at the present time to decide on the purchase price.
At least, these are ways to remedy the situation.
Buying back shares from dormant shareholders can also be a good opportunity for both existing and new investors to gain more ownership in your startup that they feel is worth it. with the effort they put into contributing to the new phase.
Lots of value, high risk, reasonable stock price. Little or no value, buy at high valuation. That’s life.
In ESG, the criteria for companies that are most highly valued in the eyes of investors, most Vietnamese founders fail at factor G – Governance, which means top management.
Liquidity: Share liquidity and upstream management are the weaknesses of startups. Because of this factor, every three or five years a business will collapse because of limited shareholder relations capacity, causing conflicts that affect business operations.
Our mission: Create financially healthy companies, manage money and develop sustainably through economic crisis cycles.
To do so, top management members must be truly connected and shareholder relations must receive significant attention.