Ask the Collective
The questions independent drinks founders ask most — answered. Distilled from years of community knowledge so the good stuff never disappears in the feed again.
What share classes should founders offer to first-round investors?
Members typically recommend issuing **Ordinary B shares** to first-round investors, rather than standard Ordinary shares, particularly when you want to retain control and differentiate investor rights from founder shares. **Key structure recommendations:** - **Ordinary B shares** — the standard approach for first-round investors; provides flexibility on voting rights depending on investment size and negotiation - **Founder shares with double voting rights** — give yourself enhanced voting control even if investors hold a significant equity stake; multiple members endorsed this approach to maintain decision-making authority **Consideration:** The choice between voting and non-voting B shares depends on how much the investor is committing and your preference for governance control. Members did not elaborate extensively on non-voting structures, suggesting voting rights are the norm in early rounds.
What share structure and preference rights are allowed under EIS eligibility rules?
EIS (and SEIS) eligibility has strict rules around share structure—any preferential shares will invalidate your relief entitlement. **Key requirements:** - Avoid any preferential share classes entirely. Members emphasise this is non-negotiable: "anyone wanting that relief cannot have shares that are preferential in anyway." - Standard ordinary shares with proportional voting rights are required. Most sophisticated investors will not accept non-voting B shares anyway. - In practice, early-stage investors typically hold under 1% of equity, so proportional voting rights won't meaningfully dilute founder control. **Bottom line:** If you're targeting EIS investment, keep your cap table simple with a single class of ordinary shares. Don't introduce preference rights, liquidation preferences, or non-voting structures—these are common in later funding rounds but incompatible with EIS relief.