Startup fundraising: What makes a cap table investor-ready and what raises red flags

Garrison Gowens for Cake Equity

Startup fundraising: What makes a cap table investor-ready and what raises red flags

In startup fundraising, ownership structure can be as decisive as revenue growth or market size. Investors often review a company’s capitalization table, a record of who owns what, before committing capital. A clean cap table signals discipline. A messy one can halt a deal.

Why Investors Care About Cap Tables

A cap table is one of the first documents reviewed during venture due diligence. It shows how control, ownership, and incentives are distributed between founders, employees, and investors. If it’s inaccurate or incomplete, investors can’t assess how much equity founders and employees will hold after a new round — which directly impacts motivation and long-term align