In the fast-evolving world of startups, Venture Studios are becoming a powerful model for company building. Unlike accelerators or incubators, studios co-create startups from the ground up, offering resources, teams, and capital in exchange for equity. As more founders choose to build with studios, one question consistently emerges: how should the cap table be structured?
A well-balanced cap table (short for capitalization table) is not just about equity allocation, it’s a reflection of trust, clarity, and shared incentives between founders, studios, and future investors. In this article, we break down how to approach cap table structuring when launching a startup within a venture studio model.
Understanding the Studio-Startup Relationship
Venture studios usually initiate the idea, assemble the initial team, and contribute significant capital, operational support, and strategic guidance. As such, their role is much deeper than that of a passive investor. Their equity share often reflects this heavier involvement in the early stages.
Startups built with studios typically go through the following early stages:
Ideation & Validation – The studio identifies a market gap and develops a viable solution.
Team Formation – A founding team is recruited, often led by the studio.
MVP Development – Resources like engineering, legal, and marketing are provided.
Spinout & Fundraising – Once validated, the startup spins out and raises external capital.
Each of these stages affects the cap table, especially how equity is allocated between the studio, founders, and early team members.
Common Cap Table Structures in Studio Models
Although there’s no one-size-fits-all formula, most cap tables in studio-born startups follow a similar pattern during the spin-out phase:
1. Studio Equity (20%–60%)
Studios generally take a larger equity stake than a traditional investor due to their active role in the company’s creation. This stake typically ranges between 30% and 50%, depending on how much the studio contributed in terms of capital, resources, and risk.
Some models may go as high as 60% in early concept-phase startups, especially where the studio also provides the CEO or core leadership team. Over time, as the startup raises capital and scales, the studio’s ownership usually dilutes.
2. Founding Team Equity (20%–50%)
Founders joining a studio venture may receive 20% to 40% equity, depending on when they join and what responsibilities they take on. A technical co-founder joining post-MVP might receive less equity than one who joins at the ideation stage.
Founders often receive their equity through a vesting schedule, commonly over four years with a one-year cliff, aligning long-term commitment with ownership.
3. Employee Option Pool (10%–15%)
Like any startup, those born from studios need to attract and retain top talent. An option pool—typically 10% to 15% of the cap table, is reserved for employees, especially during the first fundraising round.
Early hires may receive larger chunks from this pool, particularly if they are taking on key operational or product roles in the earliest stages.
4. Investor Equity (5%–30%)
If the startup raises a pre-seed or seed round soon after spinning out of the studio, the new investors’ equity will also need to be accounted for. Early-stage VCs or angel investors may take 5% to 20% depending on the round size and valuation.
This dilutes all existing shareholders, including the studio and founders. Planning for this early ensures the cap table remains fair and balanced post-investment.
Best Practices for Cap Table Planning
● Model Scenarios Early
Before finalizing equity splits, it’s crucial to model various scenarios: What happens if you raise multiple rounds? What if key founders leave early? Having these projections gives clarity and avoids surprises.
● Align Equity with Value Added
The cap table should reflect the actual value contributed. A studio that provides engineers, designers, and growth experts deserves a larger stake than one offering only desk space and mentorship. Likewise, founders driving product and sales should be fairly compensated.
● Use Vesting and Cliff Periods
To ensure long-term commitment, both studios and founders often use vesting schedules. A typical 4-year vesting with a 1-year cliff protects the company from early departures and ensures equity is earned over time.
● Create Clear Operating Agreements
Equity is only one part of the relationship. Make sure legal documents (like operating agreements, term sheets, and founder agreements) clearly outline roles, responsibilities, and equity terms. Transparency builds trust.
How to Think About Studio Involvement Over Time
One unique aspect of cap tables in studio-led startups is the evolving role of the studio. In early stages, the studio is hands-on. But as the founding team grows, external funding is raised, and operations scale, the studio often steps back.
Some studios gradually reduce involvement or maintain board-level influence. This transition should be planned in advance and reflected in vesting or advisory agreements.
Conclusion
Structuring a cap table with a venture studio requires balancing contributions, expectations, and future growth potential. While studios may take a significant early stake, the cap table must remain attractive for future investors and fair to founders who take on operational leadership. By modeling scenarios, aligning value with equity, and using legal clarity, startups can ensure their cap table empowers, not hinders, their long-term success.
As venture studios continue reshaping how startups are born, a thoughtful approach to equity is essential. A well-structured cap table is not just a spreadsheet, it’s a roadmap for shared ownership, mutual accountability, and startup resilience.
