Knowledge base

According to the Center for Strategic & International Studies (CSIS) Preliminary Assessment, open-source software is spread across 96% of US civil and military codebases. This is not an industry secret that all tech companies rely heavily on open-source software to build their products.

The rise in defense tech startups due to global security challenges in the world puts them in between traditional startups with a well-trodden path (Build-Sale-Scale) and hard-regulated suppliers to defense authorities.

ESOPs (Employee stock option plans) are a common mechanism for incentivizing the best employees and top management. It originated from startups, where company equity is often the most affordable type of compensation.

It may seem natural for founders – to have a separate file where all shareholdings are listed and updated from time to time. However, I have experienced the opposite when this file is usually neglected or forgotten. Founders might ask “Why do I need this if there are only two shareholders with 50% in the company?” First, to simply be transparent with your partner. And, what is also important, to keep track of your Finance and Legal as even minor transactions might affect the cap table. For example, your partner wants to hire a VP of Engineering and agrees on the 0.5% ESOP with a 4-year vesting period. This is the case when you already need to update the cap table; below I will explain why.