Set up your cap table correctly from day one

Understand what a cap table is. A capitalisation table tracks who owns what percentage of your company. It lists all shareholders (founders, investors, employees), the number of shares they hold, the type of shares (ordinary, preference), and the price paid.

Set up your cap table on day one — before you raise anything. A simple Google Sheet works at the very start. Record: founder names, number of shares issued, percentage ownership. Two founders splitting 50/50 who each hold 5,000,000 ordinary shares is a clean starting point.

Agree on founder vesting immediately. Standard vesting is 4 years with a 1-year cliff: a co-founder who leaves in year 1 gets nothing; after year 1 they keep 25%, then vest the rest monthly. Without vesting, a co-founder can leave on day 91 and walk away with 50% of your company.

Create an option pool before raising. Most institutional investors will ask for a 10-20% option pool for future employee equity. Create this before the investment round so it dilutes existing founders, not the new investor.

Understand SAFEs. Simple Agreements for Future Equity are the most common early-stage funding instrument in Africa. A SAFE converts into equity at a future priced round. Key terms: valuation cap (the maximum price the SAFE converts at), discount rate (the % discount the SAFE holder gets at conversion), and MFN (most favoured nation — ensures the SAFE holder gets the best terms of any future SAFE).

For a Nigerian company, use Lawpadi's SAFE template adapted for Nigerian law. For a US Delaware company (common for YC applicants), use the YC SAFE template — it's the industry standard.

Record every SAFE, convertible note, and equity round in your cap table immediately after it closes. Include the date, investor name, amount, valuation cap, and discount.

Use dedicated cap table software when you have more than 3 investors. Carta and Pulley are the industry standards globally. Both support Nigerian and Kenyan companies. Carta starts free for startups.

Never issue shares to anyone — advisors, early contractors, or friends — without a signed legal agreement specifying vesting terms and IP assignment back to the company.

Share a clean, updated cap table with every investor you pitch. It signals professionalism and prevents surprises during due diligence.