Tech founders need to stop handing over so much equity

This is a VC-centric perspective, applicable not only in health tech, and which basically starts from the idea that the management team (founders) needs to be incentivized appropriately with equity for being aligned with good execution.

Also, as a new shareholder, restructuring the cap table is more expensive than diluting the founders and other investors to get at the table. And not worth it more often than not.

The other side of the table says that founders building companies don’t optimise for investors’ business model but for sustainable development or business survival. The latter combined with lack of experience will often lead to messed cap tables, which investors tend to avoid in spite of an interesting opportunity.

Truth is, if you are a founder who anticipates using risk capital down the road, your cap table is as important as your team and as your business fundamentals.

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