Designing a Cap Table Structure Korean St | Prime Chase Data

In U.S. fundraising, the first thing that breaks is usually not your technology or your market—it’s your cap table. Once an investor says, “Why is this so complicated?” the deal slows down, legal diligence gets heavier, and your pricing power drops fast. Building a cap table structure that works for U.S. investors is not about making the ownership table look neat. It’s about creating a “tradeable capital structure” that minimizes risk in the eyes of U.S. investors and scales cleanly into the next round.

This article explains the concepts in a way non-experts can follow, but it is organized around the actual checkpoints used by investors and legal teams. From incorporation through Series A—and into structures preferred by U.S. investors (VC, CVC, angels)—we’ll cover the principles for designing your cap table and the practical mistakes to avoid.

What U.S. investors look for first in your cap table

U.S. VCs typically move fast: screen quickly, strip out structural risk, then lock terms. Your cap table is the first real filter in that process. Most investors will focus on four things right away:

Clarity of control: Who actually has decision-making authority, and who holds any special or exceptional rights?
Dilution path: How dilution accumulates through the next round, and whether the option pool needs to be expanded.
Hidden rights: SAFE/convertible notes/preferred terms, side letters, tag-along/ROFR and similar provisions.
Clean documentation: Whether the shareholder register, board/shareholder resolutions, and stock option grants are properly documented.

What worries U.S. investors most is a structure that can “blow up later.” For example: excessive redemption rights for early shareholders, multiple overlapping conversion mechanics, or verbally promised options that were never formally granted. These issues can block deal closing even when the business is performing well.

If you want to go deeper on terminology and structural concepts, the U.S. SEC’s investor education materials provide a solid baseline glossary.

The core cap table framework: “Simplicity + Predictability + Scalability”

When you design a cap table that needs to hold up with U.S. investors, evaluate it on three dimensions:

1) Simplicity: Keep the cognitive load low

U.S. investors treat time as money. If it takes too long to understand your cap table, they will assume additional risk is hiding beneath the surface. Minimize the number of share classes (common/preferred), cut down on one-off exceptions, and keep rights within each class as uniform as possible. The easier it is to understand, the more investable it becomes.

2) Predictability: Dilution must model out in numbers

Investors immediately ask, “How much will the founders own after this round?” That means your dilution path must be modelable and transparent: option pool increases, SAFE conversions, participation features on existing preferreds, and more. A cap table is not just a static snapshot—it’s a scenario-driven model.

3) Scalability: It must roll into standard next-round documents

U.S.-style rounds typically follow a pattern: term sheet → stock purchase agreement → investors’ rights/shareholders’ agreement → amended charter or certificate. Your cap table needs to extend naturally into this standard documentation stack. If you embed too many local-market “exceptions” early on, you’ll pay a high restructuring cost in later rounds.

Six cap table structures that often break U.S. deals

In practice, the same structural problems show up again and again. If two or more of the following describe your company, U.S. investors will classify your structure as high risk:

Multiple convertible notes/SAFEs with inconsistent valuation caps, discounts, or unclear ranking and priority.
Redeemable convertible preferred (RCPS or similar) with quasi-fixed returns that conflict with growth-style equity.
Founder equity without vesting, and no mechanism to claw back already-issued shares if a founder leaves.
Stock options that were “promised” verbally without board approvals, grant dates, exercise prices, or vesting schedules documented.
Complicated ownership between subsidiaries/affiliates and IP that is not clearly centralized at the parent company.
Minority shareholders holding scattered, excessive veto rights, ROFRs, or tag-along rights that make it hard to design a coherent rights package for new investors.

SAFE and other convertible instruments are familiar tools to U.S. investors—but a “stack” of layered SAFEs is a red flag. SAFEs are powerful precisely when they are simple. To see the standard structures, refer to Y Combinator’s SAFE templates.

A baseline cap table structure: From formation through Series A

There is no single “perfect” structure for every company. But there is a baseline that tends to clear U.S. investor review and set you up well for future rounds. Below are commonly used design principles.

Founder equity: Design with vesting as the default

In the U.S., founder equity is effectively treated as a retention mechanism. The market standard is close to four-year vesting with a one-year cliff (nothing vests before year one; 25% vests at the one-year mark). If shares are already issued, the equivalent structure is reverse vesting—allowing the company to repurchase unvested shares if a founder departs early.

This is not about emotion or trust; it’s about risk management. Early founder departures are one of the most common risks in young companies, and the cap table needs to absorb that risk.

Option pool (ESOP): Size by headcount needs, manage the timing

Think about the option pool using two questions. First, over the next 12–18 months, what are the critical hires and what total compensation (including equity) will they require? Second, will the pool be created or expanded pre-money or post-money?

U.S. VCs frequently ask for “pre-money option pool expansion,” which pushes more dilution onto founders. To push back effectively, you need a concrete hiring plan and market benchmarks by level. Resources like Option Impact’s equity compensation data can support your negotiation with real data.

Early investors (angels/seed): Prioritize standardized rights

Terms that look “friendly” in an angel round often become a constraint at Series A. For example, if one particular angel gets unusually strong information rights, veto rights, or ROFRs, it can make it difficult to grant a coherent rights package to a new lead investor. From the start, standardize the rights bundle and keep exceptions to an absolute minimum.

To understand how U.S. investors think about standardization, the NVCA model legal documents are a practical reference point.

The “structure gap” when Korean startups meet U.S. investors

There is a real gap between cap tables built under Korean legal practice and the structures U.S. investors are used to reviewing. The problem is not the difference itself—it’s the extra explanation cost and the perception of unpredictability.

Beyond common vs. preferred: Think in terms of “rights bundles”

U.S. investors care less about the label—common or preferred—and more about the bundle of rights attached: liquidation preference, conversion rights, participation, protective provisions, dividends, and redemption. Korean startups often issue “preferred shares” where these rights differ case by case. In that world, the cap table alone doesn’t reveal the economics or control, so legal diligence becomes longer and more expensive.

Liquidation preference (1x) and participation are sensitive terms

U.S. VCs often negotiate around a baseline of 1x non-participating preferred. In some markets, participating preferred still appears. What matters is whether your company can explain why a particular structure was used and how it will be handled in the next round, with numbers.

If you can show, in a simple table, who gets what under various liquidation scenarios, negotiations move much faster.

Operational best practices for a U.S.-ready cap table

Even a well-designed structure will lose investor confidence if it is poorly managed. U.S. investors often use the completeness of your data room as a proxy for your team’s execution quality.

1) Your cap table must be a single source of truth, not just a file

If multiple Excel versions are floating around, your diligence will break down. Share counts, option grants, convertible instruments, and vesting status must be synchronized in one system. In the U.S., tools like Carta are close to the market standard, and many investors are already familiar with them. Before you raise, review Carta’s cap table management guides to align your operations with investor expectations.

2) You should always be able to answer three numbers on the spot

Fully diluted ownership percentages for founders, broader team, investors, and the option pool.
Post-money ownership structure assuming all SAFEs/convertibles convert.
Founder dilution if you raise your target amount in the next round.

If you can’t answer these instantly, investors will conclude that management does not understand its capital strategy. No matter how compelling your product story is, the deal process will stall at the capital structure.

3) Pre-align to a diligence checklist to increase your leverage

In U.S. fundraising, if diligence drags on after the term sheet is signed, your terms often deteriorate (repricing) or the deal loses momentum internally at the investor. If you pre-organize your cap table documents to match a standard diligence checklist, speed itself becomes a competitive advantage.

Shareholder register, issuance history, and evidence of share certificates or electronic registration.
Board and shareholder resolutions (share issuances, option grants, charter amendments).
Option plan documents, individual grant agreements, vesting schedules, and exercise records.
Original SAFE/convertible note agreements, amendments, and any side letters.
Shareholders’ agreements and summaries of preferred share terms (including a rights table).

How to defend your cap table in negotiations

Negotiating with U.S. investors is not about who argues louder; it’s about who brings better evidence. Cap table issues in particular need to be framed numerically, not emotionally.

Responding to option pool expansion demands: Use hiring plans and benchmarks

If an investor demands a 15–20% option pool built into the pre-money valuation, founders take an immediate dilution hit. The way to push back is straightforward: present your 12–18 month hiring plan, market comp ranges by role, and the equity ranges you intend to offer. The key is to show “what’s needed and why” with numbers, not intuition.

Testing liquidation and participation terms: Model exit scenarios

Investors want downside protection. Companies want to preserve upside. You don’t resolve this tension with rhetoric. Build a table showing distributions at three or four exit values (for example: $5M, $30M, $100M, $300M) and show how proceeds are allocated by stakeholder under each term set. That makes the tradeoffs visible and rational.

Simplifying a SAFE stack: Present the “post-conversion cap table”

When you have multiple SAFEs outstanding, investors are really asking, “When I come in, who else is ahead of me and by how much?” The solution is to convert complexity into a clean picture: model the share count at conversion, including discounts and valuation caps, and present a standard post-conversion cap table. Where possible, consolidate or clean up legacy terms. Once the structure is simple, investors can focus on price instead of risk.

Checklist: Is your cap table ready for U.S. investors?

Before you meet U.S. investors, run this internal checklist. Clearing these points substantially reduces diligence risk.

Your fully diluted cap table is up to date and reflects options, convertibles, and vesting status.
The conversion logic for SAFEs/convertible notes is consistent between legal documents and your financial model.
Founders and key executives are on a clear vesting schedule.
All option grants are backed by board approvals and signed grant agreements.
Preferred share rights (liquidation preference, conversion, protective provisions, dividends, redemption) are summarized in a clear rights table.
Any exceptional rights (side letters, special deals) are listed and can be clearly explained to new investors.

Today’s decisions set the cost of your next round

Your cap table is not just a record of the past—it is your future negotiating leverage. If your structure is simple and predictable today, you will secure better lead investors faster in your next round. If you accumulate exceptions and undocumented promises “because things were urgent back then,” they will become more expensive to fix as your rounds get larger.

Practically, you have two next steps. First, build a fully diluted, scenario-based cap table model, and maintain separate versions for internal planning and for investor presentations. Second, organize your documents into a data room that matches U.S. investor expectations to shorten diligence time. If you clean up your cap table structure now, your growth story will not be overshadowed by capital-structure risk when you finally sit down at the negotiation table with U.S. investors.