We talk to startup founders all the time, and one of their biggest struggles is wrapping their heads around what will happen with their capitalization table (cap table). Probably the most challenging concept to grasp is that new shares of stock get issued/created instead of transferred between founders and investors.
On a seed round of funding, say, a founder will not ‘yield’ or sell a percentage of their shares to investors; instead, the company will issue new shares, which causes the percentage distribution to change.
