Chidi’s Cap Table Problem
Chidi built one of the most promising healthtech platforms in Eastern Nigeria. His app connected rural patients with urban doctors via telemedicine, and within 14 months he had 8,000 active monthly users.
He raised his first N5 million from friends and family, then another N12 million from a local angel network. By the time he walked into a Series A conversation with an impact investor, he felt ready.
What the investor found during preliminary due diligence made them pause. Chidi had given away 40% of his company across 11 investors with no formal shareholder agreement.
Two of those investors had verbal side agreements Chidi hadn’t documented. His co-founder had departed 8 months prior and still held 15% equity with no vesting cliff or cliff acceleration clause.
The cap table was, in the investor’s words, “a legal minefield.”
The investor liked Chidi’s business. They didn’t invest. Cleaning up the cap table alone took Chidi 9 months and cost him approximately $15,000 in legal fees and one friendship.
Chidi had been funding ready for years. He was not investment ready. Nobody had told him there was a difference.
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