How do you kill your cannabis or psychedelics company?

You start with a toxic, unsalvageable cap table (CT)

The CT is a key document used by investors and key hires to understand your firm’s ownership ‘health’.  A CT outlines who owns your company and with what financing instruments. 

Problematic CTs-

1. Are not accurate, or transparent with regards to ownership and onerous investor rights. This opacity creates shareholder misalignments, fosters mistrust, and restricts later funding options;

2. Have >40% of the equity in the hands of uninvolved shareholders who got their shares for close to zero cost.  This ‘dead equity’ demotivates founders & employees (the real drivers of the firm), turns off future investors and impedes recruiting efforts;

Bad CT’s are made, not born.  The culprits are typically unscrupulous investors & funds that seek out short-term advantage at the expense of the founders and company’s long-term health. And naive entrepreneurs who don't consider long-term implications.

Equity is valuable and should not be squandered. Founders should prioritize transparency, get advice from experienced professionals and seek to balance the interests of all parties.  

Don’t start your business off on the wrong foot with the bad investors and financing structures. 

#captable #investors #psychedelics #equity #founders