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A capitalization table or "cap table" is a record of the equity ownership and actual ownership percentage of each member of the company. Private companies typically develop a cap table when they are first formed to capture the stock ownership of the co-founders and then later begin recording stock ownership of employees, advisors, and investors.

Why do Startups need Cap Tables?

The moment the number of shares in our startup expands to more than one owner, we typically create the company's cap table. This is just a ledger of where the company's ownership stands and can be captured in something as simple as a spreadsheet.

As our startup expands, cap table management becomes more complex, such as when we take on a funding round with a venture cap...

Startups use their elevator pitch to quickly communicate their startup idea and value proposition in one or two sentences.

In our previous idea validation lessons, we focused on the importance of taking your initial idea and defining your problem, particular market, advantages, and customer needs. Now it’s time to refine those learnings into a polished Elevator Pitch and continue our startup idea validation.

The heart of every great Elevator Pitch includes 4 essential components:

ONE Nail The Problem

As we learned, great business ideas start with a well-defined problem and the ability to identify how painful that problem is. Now, we’ll concentrate on how to effectively articulate it in your elevator pitch.

TWO Explain The Solution

You’ve zeroed i...

Before we spend a dime on building anything, we’re first going to learn how to assess the feasibility and viability of our startup idea to see whether we should forge ahead with confidence, pivot, or go back to the drawing board altogether.

This should always be the first step for every Founder who is considering pursuing a startup idea. Broadly, this process is called idea validation.

Intro to the Business Idea Validation Process

As a Founder, chances are you’ve experienced the “eureka” moment — that feeling of capturing lightning in a bottle when you suddenly strike upon an idea that has you running to tell your friends, family members, and baffled strangers you encounter on the street (but probably not your target audience).

Nine times out o...

Welcome to Phase Four of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - How Startup Equity Works

Phase Three - How to Split Equity

Phase Four - Part 1 - Equity Management

• Part 2 - Recovering Startup Equity ( ←YOU ARE HERE 😀)

Let's do this!

When it comes to startup equity distribution, giving away a startup's equity is easy. How much equity do we get back? Well, that's a different story altogether!

An "equity clawback" is designed for early-stage startups to essentially reverse an equity grant based on a number of provisions...

Welcome to Phase Four of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - How Startup Equity Works

Phase Three - How to Split Equity

Phase Four - Part 1 - Equity Management ( ←YOU ARE HERE 😀)

• Part 2 - Recovering Startup Equity

Let's continue!

Splitting startup equity is only half the challenge for early-stage startups — managing startup equity is a whole different issue! How much equity we split and the founders' ownership percentage is generally determined by what we expect each founder to contribute.

But the problem is once ...

Welcome to Phase Two of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - Part 1 - How Startup Equity Works

• Part 2 - Startup Stock Options

• Part 3 - Startup Stock Vesting

• Part 4 - Startup Stock Valuation ( ←YOU ARE HERE 😀)

Phase Three - How to Split Equity

Phase Four - Equity Management

Let's continue!

Early-stage startups use a Stock Valuation to determine their fair market value. This will determine everything from how much a venture capital firm might receive for their investment to how we distribute employee stock options.

T...

Welcome to Phase Two of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - Part 1 - How Startup Equity Works ( ←YOU ARE HERE 😀)

• Part 2 - Startup Stock Options

• Part 3 -Startup Stock Vesting

Phase Three - How to Split Equity

Phase Four - Equity Management

Let's continue!

Startup companies have been wrestling with how to structure stock ownership forever. As private companies we have major decisions to make, from raising venture capital to awarding key employees with equity to just splitting equity among co-founders — we need a stru...

Welcome to Phase Three of a four-part Splitting Equity Series. If you missed it, start your journey here: Introduction - Early Startup Equity — Getting it Right before continuing on if you haven’t already, and go in order from there.

Phase One - Startup Equity - Avoiding Early Mistakes

Phase Two - How Startup Equity Works

Phase Three - Part 1 - How to Split Equity

• Part 2 - Splitting Equity Today

• Part 3 - Splitting Equity in the Future ( ←YOU ARE HERE 😀)

• Part 4 - Calculating Startup Equity Splits + FAQ

Phase Four - Equity Management

Let's continue!

Founder equity splits rarely turn out to be what we hoped they would be after Year 1. The co-founders at startup companies start off with the best intentions, but as the business venture turns into lon...

Running a startup is a ton of work as a solo Founder, so much so that many Founders find themselves at a loss trying to get everything done. For those that are non-technical, this proves to be a challenge, as coding is essential in this day and age, so bringing on a technical co-founder is a must. This is also true for technical Founders missing the mark on the creative front, so it's no surprise that one of the most searched terms on the internet is "finding a cofounder."

It seems like it should be easy — find a co-founder (or more) that aligns with your startup idea, mission, and has the complementary skills to do all the things you don't know how to — but it's not that simple. Finding the right co-founder is a complex combination of effor...

Continuing in Phase Three of a four-part Funding Series:

Phase One - Structuring a Fundraise

Phase Two - Investor Selection

Phase Three - The Pitch

• Part 1 - Anatomy of a Pitch

• Part 2 - Market Size

• Part 3 - Revenue Model

• Part 4 - Operating Model

• Part 5 - Customer Definition

• Part 6 - Customer Acquisition

• Part 7 - Funding

• Part 8 - Key Pitch Assets

• Part 9 - Traction ( ←YOU ARE HERE 😀)

Phase Four - Investor Outreach

Let’s dive in!

Startup Traction is your opportunity to tell investors how far you've taken the business up until this point. Just having a great idea is wonderful, but generating traction is what truly differentiates you from the pack. Especially in the early days, the only thing better than traction is more traction.

Traction Sets You Apart...