What are investor expectations for equity distribution and cap table management?
Short Answer
Investors expect: founders retain 40-60%, employee option pool 10-20%, existing investors dilute pro-rata. Poorly managed cap tables kill deals.
Full Explanation
Post-Series A, founder ownership typically looks like: founders 50-60%, series A investors 20-30%, employee option pool 10%, earlier investors and angels 10-15%. This depends on dilution history—if founder only did one seed round, ownership is higher. Cap table complexity kills deals: if you have 50 angel investors at different valuations, diligence becomes a nightmare. Investor expectations: 1) Cap table is clean and documented. 2) Option pool is established (10-20% of post-investment shares). 3) Vesting is standard (4-year vest, 1-year cliff). 4) No surprise liabilities (convertible notes with unusual terms, SAFEs with non-standard caps). 5) Founder ownership doesn't drop below 35% (sub-35% signals founder dilution concerns). Example honest cap table: "Pre-Series A cap table: founders 70%, seed investors (2 SPVs) 15%, angels 10%, option pool 5%. Series A investment: £3M at £6M post-money. Post-Series A: founders 46%, Series A 50%, seed investors diluted to 10%, angel diluted to 6%, option pool 8%. Total fully diluted shares outstanding: 1.2M. Founders have received £1.5M in secondary sales to manage personal cash needs." This is transparent. Cap table surprises (convertible notes with non-dilutive provisions, complicated SAFE terms, missing shareholder documentation) trigger legal due diligence delays. Opagio's questionnaire helps founders document cap table cleanly and present it credibly to investors.
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Further Reading
LTV:CAC for Founders: The Ratio That Predicts Fundraising Success
LTV:CAC is the ratio investors use to determine whether your business model works. This guide explains how to calculate it correctly, the benchmarks by stage and business model, and why improving LTV:CAC signals intangible asset compounding.
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