So, you’ve got your initial cap table. If you’re like most startups, you’re only dealing with yourself and a handful of co-founders.
However, it’s probably time to start bringing on additional employees and outside professionals. Stock compensation and stock options are some of the most attractive offers a startup can make to a prospective hire.
You have the option of offering stock compensation as either a percentage of company or an absolute number of shares. As a general rule, startups should offer an absolute number of shares in lieu of percentages — it’s more accurate and easier to manage.
Note: If there’s one area that makes cap tables a nightmare, it’s here. Issuing stock options to employees gets complicated really fast.
Every stock grant, every vested share, every stock option — record it all. Your business needs to keep an accurate, updated record of every aspect of your equity structure. That includes tracking stock repurchases, stock transfers, restricted stock, and plenty more.