Edgar: Welcome to the latest episode of Raise and Exit podcast. I have a question for you: what do you do when you've been a multi-time founder, had some exits, gone internationally to run an accelerator, then sold it, and then encountered a whole range of different deals? What is next? For that, we have Bob Gillespie to give you the pathway for your future. Bob, welcome to the show. Please build on that introduction — and tell us why you have "Cap Table Expert" in the background. Tell us a bit about yourself and what you're up to these days.
Bob: Thanks, Edgar. So, as you mentioned, three-time founder — then I got into the investment side of things. I ran an accelerator in Turkey of all places, then came back to the US and ran another one. We got purchased by a venture fund where I'm still working. I manage about 70 investments. But one thing I really enjoy — I'm a bit of a math dork. Through my network I started running across a lot of earlier-stage companies having massive problems with cap tables. I find that the information out there is okay but confusing, and lawyers will charge you an arm and a leg — and quite honestly, I think a lot of times they don't even do it properly.
I've been doing cap table work for probably 15 years, and finally just went out and decided to put my stamp on it. That's captableexpert.com — I've worked with hundreds of companies on all things equity structures and cap tables. It's one of the most fun things I do: working with a wide array of startups, hearing their ideas, and getting them to the next step in a professional, constructive fashion — making sure they have the right underpinnings for success. Because if you don't have that structure, it's really hard to be successful.
Edgar: I appreciate that color, Bob. You have this experience from looking at so many deals and managing it with your own investments. In the spirit of our show — which is about knowledge transfer — I'll start with an extremely basic question: when do you not need to worry about a cap table? Under what conditions does it not matter?
Bob: I would say once you've exited, the check is in the bank, and you've distributed the funds — then you can tear it up. But other than that, you better know that thing, and it better be a living, breathing document. I don't think cap tables are something you build up front and then put in a drawer. I'm always horrified when I ask a company for their cap table and they say, "Well, I've kind of got to put it together." Every time something happens, it should go into the document, and that document should tie to all the supporting paperwork.
It's like backfilling corporate minutes four years after the fact. It's bad enough when you have the historic documents, but it's even worse when you're not sure what actually happened — "I think we gave Edgar some options. We have a document that says Edgar gets 2%, but we never signed it." That's a legal mess. A verbal contract is still a contract. And if that person later waves a document at you when you've raised money and diluted everyone — now you have a serious problem. Percentages are dangerous when things are undocumented. When you try to reconstruct what happened, everybody loses.
Edgar: I think what you're pointing to, Bob — and I want to emphasize this for our viewers and listeners — this isn't just a problem for first-time founders in their first few months. I've worked with companies that are over two decades old with cap table issues that ultimately impair a transaction because they need to be deconstructed. You always need to be able to understand who owns your business in a transaction context, which is different from who owns it day-to-day. Can you add some color on that? Things like change-of-control provisions, exercising warrants — what should people be thinking about well in advance when they start structuring their share capital?
Bob: Let's take a simple base structure. It's me and you, Edgar. We start a company, we create a million shares, and because you're a little smarter than me, we give you 51%: 510,000 shares for you, 490,000 for me. Great. But do we have a share issuance agreement that documents that? And did we file our 83B election? Because we should be vesting.
Edgar: Hold on — you just said something that is so missed by people: shares issued at registration of the corporation versus shares you grow into. There is a vesting period. Some founders just give shares to everybody at the beginning, but in a multi-founder situation, you should have to stick around — or hit certain milestones — to earn your equity. That's a critical piece. Back to you, Bob.
Bob: Exactly. Say I did this with my two brothers — Stephen, Scott, and me. We create a company, we each own a third, we have the best intentions, and nobody's going to leave. Then suddenly one brother's wife gets a job in China. He says, "Hey guys, I can't do this anymore. But I own a third of the company. Go get 'em, fellas." And now we're doing all the work while he holds a third of the equity. If you then take in an investor and buy him out, those shares don't go to the remaining founders — they go back into the company, which increases every investor's pro-rata position too. That causes problems.
What you should do when creating a company with other people is: agree on the ownership split, then vest those shares over time — say three years, 36 months. Build in a six-month cliff — if anyone leaves before six months, they get nothing. After that cliff, vest monthly: one-thirtieth of the remaining shares per month until the end of the three years.
Edgar: I think in an era of AI-aided development, where valuations can change dramatically between Monday and Friday, that monthly cadence is even more crucial. What is the downside of not vesting?
Bob: Dead equity. If you don't vest, a co-founder can simply walk away with a giant chunk of equity — "It's written on a piece of paper, I'm out" — and there's nothing you can do. And here's another piece that gets missed: when someone leaves before fully vesting, you buy back their unvested shares at the original purchase price, which was essentially nothing. Your stock issuance agreement protects you from having to pay out current fair-market value for shares they never earned. Dead equity on a cap table due to lack of vesting is one of the most common problems I see.
Edgar: There's also the voting-rights angle — you can be on the cap table without voting rights. Different share classes can separate economic ownership from directional control. Anything to add on that before we shift to options?
Bob: Honestly, I'm not a big fan of Common Class A shares that vote and Common Class B that don't. Any negotiation between a founder and an investor has two components: financial and control. Those are negotiated on their own terms.
What I think most founders should do is carve out an option pool — say 10 to 20% — and use it for early hires, advisors, board members, and people who can help them. Options don't clutter your cap table the way shares do. An option gives someone the right to buy a share in the future at a price set today. If your stock is worth a penny now, you document that Edgar can buy 100,000 shares for a penny each in the future — but you lock in that price now.
Here's what gets missed: a lot of founders issue options at par value — say $0.0001. So when those 100,000 options vest, the person writes a $100 check and becomes a shareholder. Who isn't going to write a $100 check? If you want people to have real skin in the game when they convert their options to shares, set a more meaningful strike price using a 409A valuation. If you and I have a million shares and the company is worth $500,000, that's 50 cents per share. Issue options at a 50-cent strike price and when that person vests, they're making a real decision about whether to write a meaningful check for an equity stake.
Edgar: There is so much in here, Bob, that this could be an entire educational series.
Bob: I've already got all the talks. Go to my website.
Edgar: I want to shift to the accelerator angle. You've launched one. They participate in investments differently. How does a founder balance the equity an accelerator takes with the value they provide? And how do you manage those expectations?
Bob: Accelerators have become a bit of a cottage industry, and I'll be pointed about this. There are some charlatans looking to grab equity by putting founders through a curriculum of questionable value. There are also very different stages of accelerators: incubator-level ones covering ICP, tech stack, go-to-market — startup 101. Then ones for companies that have built something and need to get to the next stage. Then there's more late-stage work like what I do — where you've got traction and you're pouring gasoline on the fire to scale.
A couple of things I'd think about as a startup evaluating accelerators. First: define what you want to accomplish — two or three very specific things. Not "we're going to get mentorship and money and connections." Be specific: "I want an expert on go-to-market strategy," or "I need help with business development and fundraising," or "our cap table is a mess and this accelerator can help us fix it." Going into an accelerator with defined goals and measuring success against them is how you win. A lot of people go through one and come out saying "it was good, we met some people" — but can't point to a specific outcome.
Then there's the stage question and what their curriculum actually looks like. My honest opinion: there's a reason TechStars and Y Combinator are world class. It's not just the capital and the program — it's the follow-on fund. You develop the relationship, show traction, show you're coachable, and then it's awfully nice when they come back and say "You're crushing it. We're going to lead your Series Seed." You don't want a four-month accelerator with a demo day at a hotel and some cheap wine. You want a 10-year relationship.
Edgar: That's such a great statement. Now I want to wrap up with a theme you keep circling back to: the road to hell paved with good intentions. What are some early warning signs — well-intentioned decisions that lead to cap table hell?
Bob: If you're going to take a dollar from somebody, you need to be a professional. That means you understand the structure under which you took that money.
Two examples of good intentions gone wrong. First: incentivizing your team with options. That's a great idea — but you have to document it properly. You need an option pool. You need an option agreement. You need signatures. Not writing it down means you're messing with someone's livelihood without a paper trail. That's not professional.
Second: taking money from friends and family in a poorly structured deal. A post-money SAFE note is the well-paved road now — it's the industry standard for early-stage money. Use it as-is. But what I see is founders customizing it for Uncle Joe the dentist: special interest rates, unusual conversion terms, side agreements — all things that should never be in a SAFE. Now, when a real institutional investor comes in and sees that document, they either walk away entirely or they say: "Call your uncle. All of this is coming out."
Edgar: What I'm hearing as a takeaway: you need a clear understanding of your cap table, and you should be able to pro-forma any investment vehicle clearly. And any professional investor coming in should be able to do the same from their side.
Bob: Exactly. And it's not that hard. A couple hours of work with a professional: does your current common cap table look clean? Do you have a reasonable option pool? Let's model out any SAFEs you've taken — on a current basis and as-converted. What does it look like when they convert at $6M, $8M, $10M? What if you raise $1M, $2M, $3M? What happens if investors require an expanded option pool for a key hire?
That all sounds complicated, but it's a couple hours of work. And here's the great secret: when you go to raise, you'll often know your cap table better than the investor across the table. When they say "I want to put in two million on an eight with a 10% option pool," you can say "I think we're worth ten — I'd take two on a ten, but I'm willing to give you a slightly larger option pool." If you know the numbers, you negotiate intelligently. That's how you end up owning 56% instead of 53%. Every point matters.
This isn't hard. It's detailed and nuanced. If you can understand it reasonably well, you're way ahead of the game — and it makes you a professional entrepreneur.
Edgar: Bob, thank you so much for your knowledge transfer today. For anyone watching or listening — go to captableexpert.com. Bob, this has been an exceptional addition for our listeners and viewers.
Bob: Super fun, Edgar. And if you go to my website — I'm really not here to pitch my services. I do coach. I do free sessions all the time. What I want people to do is not just be an entrepreneur — be a professional entrepreneur. If I can help you, great. If you just want to browse the site or look things up elsewhere, that's fantastic too. The world's a better place when we're all doing things right together.
Edgar: That's beautiful, Bob. Thank you. Have a good one.
Bob: Thanks, friend.