You’ve given up too much equity too soon. You’re on track to be a minority shareholder by Series A and successive rounds make you nervous. But your startup needs capital.
Series B/C/D investors worry that you’re too diluted to stay motivated.
I want to see African founders win.
$5B African VC in 2021. 🚀🚀🚀
But as Africa gets “hotter”, I think we’ll see more problems with broken early-stage cap tables given the volume of pre-seed (~80%) and number of first-time founders.
Here are some signs of a broken cap table:
You’ve given up too much equity too soon. You’re on track to be a minority shareholder by Series A and successive rounds make you nervous. But your startup needs capital.
Series B/C/D investors worry that you’re too diluted to stay motivated.
They’re possibly opportunistic angels or advisors that came in early. They’re free riders - adding little value to your journey but taking up space on the cap table. They’re not very helpful or responsive.
They’re probably institutions but they don’t necessarily share your vision. They were aligned, engaged and responsive to start with. But they may have shifted focus along the way…maybe Africa became less “hot”.
They’re PE/SME not VC and own 50% (or close enough to that) of your equity. They place demands on you that are more suited to later-stage startups. Like audited financials or quarterly boards at the pre-seed stage.
