22 Red Flags That Can Derail Your Fundraising (and How to Fix Them) | Entrepreneur

The article emphasizes the importance of cap tables in startups, revealing that many founders overlook their significance, leading to fundraising challenges. Dima, founder of PitchBob, identifies common cap table issues such as excessive founder equity concentration, lack of employee stock options, and too many minor shareholders. Each red flag complicates ownership and governance, deterring potential investors. By addressing these common pitfalls, such as distributing equity more evenly and simplifying ownership structures, founders can make their startups more appealing to investors, ultimately enhancing fundraising potential.

Cap tables are a cornerstone of startup governance, reflecting ownership and equity distribution. Their complexity often results in missteps that can cost founders valuable investments.

One common issue is when a single founder holds more than 50% of equity. While control is important, it can signal excessive centralization and discourage collaboration.

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