A Cap Table Dilemma: Founders, Boards, and the Hard Call to Reset

Conversations around cap table resets have come up with more company founders than you might think over the last year.

Here’s the situation: The company has raised capital from investors on terms reflecting the broader funding environment and are typically favorable to investors. Everyone aligns on a set of milestones, knowing that while they’re ambitious, they represent the company’s best path to increase valuation and attract future funding. Fast forward 18 months. The company has made meaningful progress, hitting some milestones, though not all.

With the board’s approval, the founder starts conversations for the next fundraising round. But the feedback quickly turns from product and market strategy to cap table complexity. Some typical comments: “Your cap table is messy.” “Founders should hold more equity at this stage.”

That’s when the dilemma sets in.

There’s a strong temptation to “fix” the cap table proactively. That is, to align equity stakes with what new investors expect before the next round. It’s within the founder’s control to do so and seems like it could set up the next raise for success.

But here’s the unpopular opinion: changing the cap table ahead of a funding round can be like a “Field of Dreams”—if you build it, they might come. The illusion is that a reset will make the company instantly more attractive, but without fresh capital or a value inflection point, it’s often just a cosmetic change.

So what’s the path forward?

Transparent Board-Driven Discussion. Before resetting equity, boards and founders should align on whether these changes genuinely impact the company’s ability to reach its next value milestone. If not, they risk sending mixed signals to investors.

Timing Is Everything. The true value of a cap table reset often comes in tandem with a funding round, reinforcing both the new capital and the refreshed structure as a cohesive step toward growth.

Clarity for Future Stakeholders. Rather than a field of dreams, investors want a clear path to ROI. Cap table structure should reflect the company’s growth story, not a rebalancing for the sake of optics. If a new investor wants to pursue an investment because they have conviction in the opportunity, they will work with the founder to create a solution concerning the cap table.

Over the next 18 months, more founders and boards will face this choice: to simplify their cap table now or wait until new capital validates the reset. While the appeal of a clean cap table is undeniable, timing and strategy matter more than aesthetics.

What would you do in this situation? Drop me a line at bpidgeon@visiontech-partners.com