What Your Cap Table White Board Looks Like Matters Less than What it Represents

I often meet founders when they are starting a company, or at least in the early parts of the journey. Corient tends to get pretty involved in this formative stage for the company and capital formation. We provide advice around things like dilution, the types of investors to bring on, the structure of the equity, and everything in between. 

As our team talks to a large number of founders a week, it may be hard to find others with the same volume of information flow outside of the venture community or perhaps your board members. The critical distinction is that we are a fiduciary to you, the founder. Others may be a fiduciary to the limited partners of their fund or the shareholders of your company.

I tend to start these conversations with a visual question:

“If you had a white board that represented your cap table, how many boxes would be on it and who would be inside these boxes?”

This is a great question for founders to ponder. And it’s worth noting that depending on the stage of the company—as well as how many “rodeos” the founder has been to—the number of boxes and who they think will be inside them can not only be dramatically different but may also be wildly more or less accurate. 

I often add an asterisk to my “white board” question which is: 

“This may be what you want to have, but tell me what you are willing to have?”  

Consider that trying to optimize a perfect cap table in the early rounds of your first company is likely a futile exercise. Be intentional about it, but don’t look to optimize. The reality is, in your first attempts, you’ll likely attract a lot more people with much smaller checks who simply believe in you, not your idea. In fact, they might not even understand the idea or much about things like IRR, MOIC and DPI. Don’t take that for granted.

Remember, it’s okay if there are 67 boxes for your first company (especially in the earliest parts of the capital formation). Yes, it’s going to be annoying and a disaster to manage at some point, but you don’t have a choice. And that’s okay. Embrace it. 

So, who will you be asking for capital? Friends, family, angel investors and Venture Capital Funds, so let’s talk about them.

Friends

This one is important as these are your believers who likely have some disposable income. Because they are friends, try your hardest to convince them NOT to invest in you! But if they are compelled, make sure they are sizing it appropriately for their balance sheet. And do your best to make sure they understand the risks and that their investment could go to $0—a binary outcome. Most of your friends, especially if they are from outside of the start-up world, aren’t used to binary outcomes. They’re used to their account balances going up and down with the stock market. 

Of course, that type of volatility is typically only a risk if you are forced to sell at a bad time. When they invest in you, it’s often romanticized and full of survivorship bias in the headlines. Start with friends in your community who have strategic value. Focus on them and their network, more than the check size, as they’ll likely punch way above their weight for you. People in this category may be writing checks as small as $5k.

Family

As it implies, these are often your zealots. They make your believer friends look like doubters! But mom, dad and uncle Ben may get in over their skis, so do your best to correct their over-leaning angle toward a more upright position so they don’t oversize the check. Don’t let them mortgage their house or take out a 401k loan, as that is likely to end badly for most people. Encourage small checks here, but don’t be surprised if they want to feel “in the game” and stretch themselves into the 5 and 6-figure territory. Caution them with the most draconian outcome.

You may also want to consider taking loans from your family, especially if they have significant balance sheets. That may feel better all around! 

Angels

Now we’re getting into the professional investors—well, sort of. A self-proclaimed “angel” investor likely not only enjoys the activity but also treats their investing like a venture capitalist in many ways. Like a vintage strategy, they could be making 15-25 investments every 2 years and may also have a pool of liquidity earmarked for follow-on rounds. These types of investors can be extremely hands off—or extremely hands on—so be cautious with this category and do your diligence as best you can. Some angels will come in with relatively small checks (i.e. $25-50k) but may interact with you like they invested 10x the amount. 

Try to get some references (unsolicited) of who else they’ve backed and most importantly, how they behave when things inevitably bounce around with the business because you need this group to be enablers, not distractions. Look for angels that are way more than a check—those who provide connectivity, insight, a broad network—and who are good humans.

Funds

A lot of founders are quick to say, “I’m not looking for any funds,” but don’t be allergic to this category. Remember that many of the super early stage, seed/pre-seed funds are just super angels with a “fund.” And a lot of times, they are former founders who can add a lot of strategic value as it relates to other founders, investors, potential customers, and more. 

They may have the “ins” with Walmart, Target and the like if you’re a CPG brand, or with the big banks if you’re building a fintech solution. Maybe they’re a link to a great group of influencers, or others who can help you launch. This group will likely write the biggest checks and “price” your round and may ask for a SAFE or something equivalent. They may want a Board seat as well, but remember that likely won’t last forever—especially as you raise more capital over time.

Conclusion

Raising capital is a lifeline for your company to survive before it is self-sustaining. But be mindful of who’s on your cap table, what their level of sophistication is, how much this investment “matters” to them, and if they can provide strategic value to your company. Remember, this cap table isn’t your board or even your group of advisors. It’s people that mostly believe in you and your vision—and they want you to win. 

Do your best to limit the number of boxes on the white board—but be okay with the fact that what started out as a neatly organized group of boxes will likely look like some convoluted set of shapes with spaghetti string attached. This makeshift netting is what will keep you afloat until you can pull out the eraser and work on your next round!

At Corient, we understand—and have experience in—each stage of the start-up ecosystem. And we enjoy providing objective advice to founders and entrepreneurs of all types at every stage. For more information on how the Founders and Entrepreneurs group can help you, contact your Wealth Advisor.

ABOUT THE AUTHOR

DEFINITIONS

IRR (Internal Rate of Return): The annualized return of an investment based on all cash flows over time, including capital invested, distributions to investors, and unrealized gains.

MOIC (Multiple on Invested Capital): The total value of an investment relative to the original amount invested expressed as a multiple.

DPI (Distributions to Paid in Capital): Payments made to investors from the capital they originally invested rather than from profits.

CPG (Consumer Product Good): Tangible products bought by individuals for personal use.

SAFE (Simple Agreement for Future Equity): An agreement where investors provide capital in exchange for the right to receive equity in a company at a future date, typically during the next funding round.

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5242679 –  March 2026