So You Want to Raise Capital: Pre-Seed Cap Tables for Semi-Dummies

A Terrible Guide to Setting Up Your Own Tegridy Farms... With Tegridy

For those who don’t watch South Park, the plot section on Wikipedia may be helpful. As my heart is coming from Tegridy, nothing in this post should be construed as legal advice; get your own lawyer, and don’t sue me if you don’t like the advice or if it doesn’t work out for you. This shit is complicated. Please drop me a note if you find an error in any of these guides.

The Angel Round Cap Table Playbook: What Experienced Founders Actually Need to Know

Raising an angel round is more than collecting checks—it's about building a cap table foundation that will either enable or constrain your company's future. As we built Positron, I started a running list of topics and points of debate as we got plenty of often conflicting feedback and advice on what to do. I have then split it into two buckets of data.

One bucket is focused on founders with limited experience in corporate structure, startups, and first-time founders in general. The second bucket is focused on more advanced topics. I will be posting both guides today.

While everybody will tell you to optimize for the success case, don’t listen to them. Greater than 90% of startups fail. Always keep this in mind when making these calculations. Also, be generous and kind. Owning 100% of $0 and losing a relationship is far worse than owning 1% of a $1B EV organization.

While everybody has read the stories of the founders who shank their co-founders for a buck, and god be with the founders who have the bravado and outsized belief in their own self-worth, but you can’t take your money with you when you die.

Ultimately, Elon Musk and you will end up at precisely the same level. Dead and in the memories of your friends and family.

Options versus stock for founders, advisors, and leaders

The choice between stock options and restricted stock has a profound impact on tax obligations, control dynamics, and long-term wealth creation. For founders, restricted stock with an 83(b) election filed within 30 days is non-negotiable. This single decision can mean the difference between paying taxes on $40 versus $ 350,000 or more as your company grows.

Yes, even Towelie should receive founders’ shares, not options.

Market data reveals that 85-90% of angel-stage companies use the standard 4-year vesting with a 1-year cliff structure. However, the implementation details matter enormously.

Founders should negotiate for 25% of their equity to be treated as "already vested" to recognize pre-incorporation contributions. Note: Institutional investors may attempt to renegotiate your vesting terms in future rounds, so it may be wise to start from a stronger negotiating position. This may also be an interesting way to reward the founders who do the initial legwork.

This isn't vanity—it's protection against being pushed out early while retaining meaningful ownership.

For early advisors, the calculus differs. Advisory shares typically vest over 12-24 months without cliffs, reflecting their more limited engagement. The key distinction: advisors almost always receive options rather than restricted stock, thereby avoiding immediate tax obligations while providing exposure to potential upside.

Standard advisory grants range from 0.1% to 2%, depending on the advisor's profile and level of involvement. However, if one advisor was that key advisor who gave you the recipe for your first edition of weed, you probably should be more generous.

Early employees present the most complex decisions.

• Incentive Stock Options (ISOs) offer favorable tax treatment but are subject to a $100,000 annual vesting limit and complications from the Alternative Minimum Tax (AMT).

• Non-qualified Stock Options (NSOs) create immediate tax obligations upon exercise but avoid Alternative Minimum Tax (AMT) complexity.

• Post-2020 tax reforms increased AMT exemptions from approximately $80,000 to roughly $109,400, making ISOs more attractive for many employees.

The horror stories are instructive. GovWorks co-founder Chieh Cheung left after 5 months but retained significant unvested equity. The remaining founders had to pay $700,000 to buy him out, with $290,000 coming from personal funds. The lesson: implement vesting schedules universally, even among co-founders who "trust each other completely."