People always ask me how we manage our portfolio of 9 companies. The answer is a disciplined system built around cap tables. I'm giving you a transparent, behind-the-scenes look at our exact process, templates, and the software we use to track everything.
I get asked this question a lot. At dinners, in emails, even by my own LPs. "Sahin, how do you keep track of everything?" With a portfolio of over 200 angel investments and a $1M fund, it seems like a recipe for chaos. But it's not. The secret isn't some mythical AI-powered dashboard or an army of analysts. It's a simple, battle-tested tool that's been around for decades: the capitalization table.
Most people hear "cap table" and their eyes glaze over. They think of a dusty, complicated spreadsheet buried in a lawyer's office. That's a huge mistake. Your cap table is the single most important document for your company, after your incorporation papers. It's the scorecard. It's the source of truth. And for us, it's the compass that guides every investment decision we make.
Why Your Cap Table is More Than Just a Spreadsheet
I learned this lesson the hard way. Back in the early days of MovieLaLa, my second company, we were moving fast and breaking things. We raised a seed round, then another, and we were giving out equity to early employees like candy. We had a cap table, sure, but it was a mess. A Frankenstein's monster of different Excel sheets, with conflicting numbers and notes scribbled in the margins. When we got our first serious acquisition offer, it was a nightmare. It took our lawyers weeks to untangle the mess, and the uncertainty almost killed the deal. I swore I would never let that happen again.
At its core, a cap table is simple. It's a list of who owns what in your company. It shows the total number of shares, who owns them, and what type of shares they are. But a good cap table is so much more than that. It's a strategic tool. It tells you a story about your company's history, its present, and its future. It's a roadmap for fundraising, a guide for hiring, and a shield against costly mistakes.
Our System: The Cap Table as the Central Nervous System
When I started my fund, I was determined to build it on a foundation of discipline and transparency. That meant putting the cap table at the very center of our operations. We don't see it as a static document that gets updated once a year. We see it as a living, breathing thing that we interact with every single week.
Here's a look at the key components of our cap table framework:
- The Basics: This is the stuff you'd expect. Founder shares, employee stock options, and investor shares from each round. We track not just the number of shares, but also the vesting schedules, the strike prices, and any special rights or preferences.
- The Advanced Stuff: This is where it gets interesting. We model everything. Warrants, convertible notes, pro-rata rights, even verbal promises that haven't been papered yet. If it can affect the ownership of the company, it goes in the cap table. We run simulations to see how different fundraising scenarios will impact dilution. We have a clear picture of who owns what, not just today, but in any likely future.
- The Software: We use Carta. I'm not getting paid to say that, I just think it's the best tool on the market. It's our single source of truth. It's where we manage our portfolio companies' cap tables, issue new securities, and communicate with our LPs. It's not cheap, but the peace of mind it gives me is priceless.
Cap Tables in the Wild: From SPVs to Follow-On Funding
Theory is great, but let's talk about how this works in the real world. A big part of our strategy is investing through Special Purpose Vehicles, or SPVs. An SPV is a separate legal entity we create to invest in a single company. It allows us to pool money from multiple investors into a single line on the company's cap table. This is a game-changer for founders. Instead of having to manage relationships with dozens of small investors, they only have to deal with us.
When we're considering a follow-on investment, the cap table is the first place we look. We can see how much the company has grown, how much new equity has been issued, and how our ownership has been diluted. We can model out different investment amounts and see how they would impact our position. This isn't about being greedy. It's about making smart, data-driven decisions. I remember one time we were considering a follow-on investment in a company that was doing well, but not great. The founders were asking for a high valuation, and our gut told us it was too much. We ran the numbers on the cap table, and it confirmed our suspicions. The new round would have diluted our ownership to the point where the potential return no longer justified the risk. We passed on the deal, and the company ended up being a small exit. The cap table saved us from making a bad investment.
The Mistakes I've Made (So You Don't Have To)
I've been doing this for a long time, and I've made just about every mistake in the book. Here are a few of the most common ones I see founders make with their cap tables:
- The "Set it and forget it" mentality. Your cap table is not a crockpot. You can't just set it and forget it. It needs to be updated constantly. Every time you issue new shares, every time an employee leaves, every time you even think about raising money, you need to update your cap table.
- Not tracking verbal promises. I get it. You're in the heat of the moment, you're trying to close a deal, and you make a verbal promise to an investor or an employee. If it's not in writing, it doesn't exist. And if it's not on the cap table, it's going to cause problems down the road.
- Ignoring the option pool. Your employee stock option pool is one of your most powerful tools for attracting and retaining talent. But if you don't manage it properly, it can become a huge liability. You need to make sure you have enough shares in the pool to make meaningful grants to new hires, and you need to be smart about how you structure your vesting schedules.
Your Cap Table is Your Compass
Look, I know this stuff can be dry. But it's also one of the most important parts of building a successful company. Your cap table is more than just a spreadsheet. It's your compass. It's the tool that will help you navigate the treacherous waters of venture capital. So don't be afraid of it. Embrace it. Master it. Your future self will thank you.
Don't just build a startup; build a well-structured company. Your cap table is the blueprint.
Frequently Asked Questions
What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 200+ startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.
How has this view evolved over time?
My thinking on most topics has changed significantly over the years. Early in my career, I held many conventional views that experience proved wrong. I try to update my beliefs when the evidence changes.
What's the most common pushback you get on this?
People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.
Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.