Fundraising: how to structure a deal and cap table?

Properly structuring the deal and distributing shares in the cap table during the early stages of fundraising are critical for the long-term health of the company and team motivation. Before attracting external financing, establish a basic funnel of interaction with investors: from the first contact and qualification to receiving a term sheet, closing the deal, and subsequent maintenance of partnership relations. Work with investors sequentially, improving one bottleneck of the negotiation funnel at a time instead of scattering efforts on chaotic mass mailings to everyone.

The cap table, or capitalization table, reflects the ownership structure of the company's shares by its founders, key employees, and investors. It is important to leave a sufficient share pool to motivate future employees and top management through option programs. When attracting venture financing, ensure that the founders' shares are not diluted too quickly at the seed stages, otherwise, at the Series A and B stages, the team will lose the economic incentive to continue developing the business. Use standard investment instruments, such as convertible loans or SAFE documents, at the very earliest stages to postpone the company's valuation until significant growth milestones are reached.

The deal structuring process includes agreeing on legal terms, such as pre-emptive rights, protective clauses for investors, and the procedure for making key strategic decisions. It is recommended to involve specialized lawyers with experience in the venture industry to avoid hidden traps in shareholder agreements. The transparency and cleanliness of the corporate structure significantly increase the chances of successfully passing audits during subsequent financing rounds.