Cap tables aren’t exactly the most exciting thing about running a startup. But if you’re planning to raise investment, attract top talent, or eventually exit your business, a messy cap table can come back to bite you – hard.

Investors will scrutinise it before writing a cheque. Founders have lost control of their companies because they didn’t manage it properly. And startups have missed out on exits because their ownership structure scared off buyers.

So, let’s make sure you don’t fall into the same traps. Here are the most common cap table mistakes founders make – and how to fix them before they become a serious problem.

1. Giving Away Too Much Equity Too Early

It’s easy to be generous when you’re just starting out. You bring on a co-founder, advisors, or early employees, and in the excitement, you start handing out equity left and right.

Fast forward a few years, and suddenly you realise: you barely own enough of your company to make it worth your while. Worse, when you go to raise investment, there’s not enough equity left to attract the right investors.

How to Fix It:

Be strategic about equity from day one.

• Founder shares should be split based on long-term contributions, not just who was there first.
• Advisors don’t need large chunks of equity – 0.1% to 1% is standard.
• Employees should receive equity through an option pool (more on that later), so you don’t give away actual shares too soon.
• Use vesting schedules so that if someone leaves early, they don’t walk away with a huge chunk of equity they haven’t earned.

2. Not Having a Vesting Schedule

A founder leaves after six months, but they still own 30% of the company. Sound fair? Not really.

This happens when startups don’t put a vesting schedule in place. Vesting ensures that equity is earned over time, rather than given upfront.

How to Fix It:

Set up a 4-year vesting schedule with a 1-year cliff for everyone – including founders.

• Cliff: No equity is earned in the first 12 months. If someone leaves before then, they get nothing.
• Vesting: After the first year, shares vest gradually (usually monthly or quarterly) over the next three years.

This protects the company from people leaving early while ensuring long-term commitment.

3. Ignoring Dilution Until It’s Too Late

Every funding round dilutes your ownership. That’s just how it works. But some founders don’t realise how much they’re giving up until they check their cap table one day and go, “Wait… I only own 10% of my own company?”

How to Fix It:

Before raising money, model out your dilution. Use cap table software (like SeedLegals) to see how each investment round affects your ownership.

Ask yourself:

• If I raise £2M at a £10M valuation, how much will I still own?
• How much equity do I need to set aside for future employees?
• If I keep raising at this pace, how much will I own by the time we exit?

Planning for dilution before it happens puts you in control – rather than being surprised later.

4. Poorly Managed Employee Share Ownership Plan (ESOP)

Your startup’s success depends on hiring great people. But if you don’t plan for an Employee Share Ownership Plan (ESOP) early on, you might find yourself in a tough spot later.

The problem? If you create an ESOP after a funding round, it dilutes the founders and existing shareholders. Investors often insist on the ESOP being included before the round, meaning it dilutes only the founders – a painful but common scenario.

How to Fix It:

• Plan for at least 10-15% of your equity to go into an ESOP from the start.
• Set it up before fundraising so it’s factored into the deal.
• Be clear about how options work – employees need to know when and how they can exercise their shares.

A well-managed ESOP helps you attract and retain top talent without giving away too much upfront.

5. Not Tracking Convertible Notes & SAFEs Properly

Raising money through convertible notes or SAFEs (Simple Agreements for Future Equity) is fast and easy. But they don’t show up on your cap table right away – which means many founders forget to account for them.

Then, when they finally convert into equity, you realise… you’ve given away way more than you thought.

How to Fix It:

Even though SAFEs and convertible notes aren’t equity yet, they will be – so track them like they already are.

• Include them in your cap table from day one so you’re not blindsided when they convert.
• Pay attention to valuation caps and discounts – these determine how much equity investors get when they convert.
• Before raising your next round, run conversion scenarios so you know exactly what’s coming.

6. A Messy or Outdated Cap Table

Investors hate messy cap tables. If yours is disorganised, full of errors, or doesn’t clearly show who owns what, you’ll scare off potential investors before you even get to the pitch stage.

How to Fix It:

Keep your cap table clean and up to date at all times.

• Use cap table management software instead of a messy spreadsheet.
• Regularly review and update ownership changes – especially after funding rounds, option grants, or exits.
• Before fundraising, send your cap table to a finance expert or lawyer to make sure everything is structured properly.

A clean cap table makes fundraising easier, keeps investors confident, and prevents future disputes.

Get Your Cap Table Right Before It Becomes a Problem

Cap tables aren’t just an admin task – they directly impact your ability to raise funding, attract talent, and maintain control of your company.

By avoiding these common mistakes and proactively managing your cap table, you can:

✅ Keep ownership where it should be.
✅ Make fundraising smoother and faster.
✅ Avoid dilution surprises down the road.