For High-Growth Startup

The Cap Table Pledge is a way for high-growth startups to take control over the diversification of their cap tables. Companies joining The Cap Table Coalition promise to dedicate a minimum of 10% of all funding rounds to Black, Latinx, and other underrepresented investors.

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The first pledge of this kind was taken by Finix in August 2020. They allocated 10% of their Series B extension to Black and Latinx investors and facilitated the creation of a special purpose vehicle (SPV) to bring more than 80 traditionally marginalized investors onto their cap table. This is a tangible example of how early-stage, high-growth startups can increase representation in the venture capital ecosystem and do their part to close the racial wealth gap. And it’s easy! Here is the step by step process for creating an SPV, through which The Cap Table Coalition will closely guide and aid each new member.

1. Plan your timeline

  • If you can start a company, you can start an SPV.
  • We recommend budgeting roughly two months to complete the process.

2. Tell your team

  • Ensure co-founders are bought in, and if necessary, secure board approval.
  • Discussing the SPV with the board beforehand can also inspire VCs to encourage their other portfolio companies to do the same.
  • Don't forget to suggest the Diversity Rider to your VCs too

3. Decide what portion of your funding rounds you want to allocate (min. 10%)

  • Pick an amount greater than 10% that is large enough to be meaningful and an amount you can commit to in the future.
  • Setting this up as a perpetual commitment makes it easier for early investors to exercise their pro-rata rights and not get diluted as you raise future rounds.

4. Plug in with our community of investors, identify a manager for the SPV, and set it up

  • The Cap Table Coalition will introduce you to investors, and unless you have a predetermined SPV manager, the Coalition will source a manager for you, who will form and manage the SPV.

Impact

If every early-stage, high-growth startup commits to making this significant change in their fundraising processes, the VC playing field will completely change. It’s not just about increasing representation on cap tables. It’s about helping historically marginalized groups build track records and get attribution for their work to help them start their careers and hopefully, one day their own funds. From there, more money and time can be invested back into Black, Latinx, etc. communities. We believe this will ultimately increase the number of startups, founders, and board members from those groups. Eventually, the downstream impacts will change the face of Silicon Valley, and technology as a whole, forever.

Startup Partners