Cap Table Management: Top 10 Software for your Startup

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What is a cap table?

A capitalization table, often referred to as a cap table, is a simple means to record a startup's equity capitalization. It is a complete breakdown of the shareholders' equity in a startup. Shareholders' equity means the startup's net worth, the total of all investments. Cap tables are used mainly by private companies, particularly startups, to keep track of their market value. Having explained a cap table, it is essential to note that a basic cap table compiles each type of equity ownership capital, share prices, and the individual investors. Before making any financial decision, a cap table is considered that influences the startup's market value. That's why up to date with current information and tailored according to the startup's needs.

For the management of complex cap tables as the startup scales, cap table management software may be more efficient in tracking the number of people hired, the number of investors, etc. Cap table software is an automated tool that facilitates equity management on secure servers and does not need to be maintained manually on spreadsheets.

What criteria to keep in mind when choosing vendors in this space?

1. Ease of use

The best cap table management software will let you accommodate all equity changes with ease. As the startup accelerates, your equity can deviate into complex outlines. This happens because the startup undergoes a shift in growth with every new financial apparatus, such as warrants, common stocks, etc. Accommodation of each new resource requires unique data in the cap table. Suppose the cap table vendor cannot offer flexibility to add new entrants to your startup's equity pool. In that case, it may become difficult for you to maintain and monitor your startup's market assessments. Ideal cap table management software should allow granular control and append notes to shareholders' contributions.

2. Electronic mode

Ideal cap table management software should allow electronic signatures and issue options electronically - updating the cap table each time without an additional step. It should have internalized electronic and computerized modes and should also provide automated email options for timely communication.

3. Advanced features

Cap table management software that you choose for your startup must have advanced features to support your essential needs and growing demands. It should have a user-friendly interface with an intuitive design. For recurring reports, pre-designed templates could be a significant add-on. Built-in features that manage compliance with different tax laws, such as ASC 718, IRC 409 A, Rule 701, save the time and effort that manually compiles the necessary information. The software must be compatible with any device and allow you to share access with partners such as legal advisors openly.

4. Security and Privacy

It is essential for cap table management software to let you determine who can access data. It should have security measures in place to restrict the privacy of your confidential data to limited parties. It should ideally offer SOC II compliance that monitors any unauthorized activity. The privacy policy should also entail GDPR - compliance.

Top 10 software for cap table management in 2022.

Carta

Description: Software solution working towards the ease of equity management for private companies seeking to ease ownership management.

Best for: Medium- to large-sized businesses

Pricing: Offers a free version but not a free trial. The pricing starts from $2800/year and is based on stakeholders, cap table complexity, services, and products.

Evaluation of key criteria:

Ease of use: Yes, with the ease of keeping tabs on stock options and automated updates for more vested options
Electronic mode: Yes. Electronic signatures, drafting, issuing, and exercising securities electronically.
Advanced features: Yes. 409 A valuations, audit-ready reports, ESOP valuations
Security and privacy: Complies with the E.U.- U.S. Privacy Shield Framework and the Swiss-U S. Privacy Shield Framework as set for by the U.S. Department of Commerce.

Pros:

A clean layout facilitates everything in one place.
Easy to manage stock options, current holdings
Easy to use, very good for startups with a large number of employees

Cons:

Time-consuming new format when making numerous changes
Changes to stakeholders require more elaborate steps than previously.

Pulley

Description: Platform for founders to help them optimize their equity management with ease to concentrate on the startup.

Best for: Hyper-growth startups.

Pricing: Offers a free trial. Pulley provides three plans that accommodate startups as well as established businesses:

Startup: $100/month for 25 stakeholders+ $4/additional stakeholder

Growth: $292/month for 40 stakeholders+ $7/additional stakeholder

Custom: This can be customized according to your startup's equity needs.

Evaluation of key criteria:

Ease of use: Yes, with concierge onboarding, fast setup
Electronic mode: Not known. Contact Pulley.
Advanced features: Yes, audit-ready 409 A valuations in a week for all startups and cryptocurrency firms, intuitive design
Security and privacy: The services use standard Secure Sockets Layer (SSL) technology to encrypt personal data.

Pros:

Easy to manage multiple share classes, including SAFEs and other investment vessels
Hassle-free 409 A valuation process
Fair prices for the intuitive setup and design.

Cons:

Absence of transfer agent service
Some screens do not allow you to go back to the previous screen, so you have to begin all over again.
There is no guarantee of complete security of any data other than as expressly required by law.

Captable.io (renamed as LTSE Equity)

Description: Equity management software providing equity management plans, accurate records, and plans for financing rounds.

Best for: Startups, companies, law firms, and investors.

Pricing: Offers simple pricing according to your needs, with monthly billing and unlimited user and stakeholder plans. The Fundamentals plan is priced at $250/month and the Boost plan at $330/month. Specifications to be requested individually.

Evaluation of key criteria:

Ease of use: Yes, self onboarding or option to opt for concierge support, effortless migration from any other tool
Electronic mode: Not known. Contact Captable.io.
Advanced features: Yes, with common automated workflows and smart checks, collaboration with attorneys, accountants.
Security and privacy: GDPR compliant, SSL encrypted connection, backups encrypted using PKI cryptography.

Pros.

Intuitive design and clean interface
Unique compatible product

Cons.

More sample cap table models are required for founders to initiate the process with ease.
More Integration with other solutions is needed.

Ledgy

Description: Equity management platform that eases preparation of cap tables; shareholdings with its intuitive design and provision to send messages about vesting cliffs, maturity, and more.

Best for: Startups, companies with high growth aspirations, Investors (with multiple portfolios), H.R. managers, compensation managers

Pricing: Free for early-stage startups, influential for scaling companies; customizable plans

For investors: Free for business angels, mighty for professional investors

It offers a free trial and a free version.

Request extra details from Ledgy.

Evaluation of key criteria:

Ease of use: Easy-to-use dashboard to onboard employees and manage participation, shareholdings, and prepare cap tables.
Electronic mode: Yes, with the provision of digital signatures.
Advanced features: Automated reporting, automated vesting, and exercising, intuitive, each employee has a personal dashboard, attach PDFs, bulk import Excel
Security and privacy: Compliance with the GDPR, and the Swiss Federal Act on Data Protection (FADP)

Pros:

Easy to use with intuitive design
Information can be gathered at a click very quickly and in a comprehensive manner.
Easy separate login for all stakeholders.

Cons:

Absence of international QES functionality.
Initial bugs and not very easily configurable notification feature.

Certent Equity Compensation Management

Description: Now a part of insight software, Certent offers a complete solution that private and public companies need in optimizing equity compensation plans.

Best for: Public and private companies of all sizes, from startups to enterprises in all industries

Pricing: Contact Certent.

Evaluation of key criteria:

Ease of use: Yes, simple tool for keeping track of stock options; clear listing of relevant information
Electronic mode: Not known. Contact Certent.
Advanced features: Yes, compliance management is available, but it is yet to achieve greater Integration and overall intuitive design.
Security and privacy: CCPA and GDPR compliance, all data is removed within 3 months of the service contract termination between the user and the vendor.

Pros:

Knowledgeable support team with prompt service
Good financial reporting
Robust solution for most startups

Cons:

Absence of Tex mobility calculation or support
Complicated U.I. and authentication process

Shareworks by Morgan Stanley

Description: Expansion in equity compensation solutions as part of Morgan Stanley's at Work's suite of workplace financial solutions. It is a complete equity management solution with advanced features functioning globally to get the most out of cap table management.

(It is important to note that all products and services are not available in all jurisdictions or countries).

Best for: Startups, public, and private companies

Pricing: Offers a free trial. Contact Morgan Stanley.

Evaluation of key criteria:

Ease of use: Easy-to-use dashboard for smooth navigation, but a higher degree of user-friendliness is lacking.
Electronic mode: Mobile app is available for participants. For other features in an electronic way, contact Shareworks.
Advanced features: Yes, integrated cap tables, 409 A valuations, and ability to customize currencies and language CRC 3344807 (12/20)
Security and privacy: SSL technology data is accessible only to those authorized with special access rights to their systems, compliance with California Online Privacy Protection Act and Children's Online Privacy Protection Act (COPPA).

Pros;

It supports transactions in 50+ currencies.
Automated cap table process from Excel
Waterfall analysis

Cons:

Users need to know their I.D., zip code, or SSN as part of the activation process, and this data is not added to the system, making it a manual procedure.
Slow system for startups with large-cap tables and additional delay in moving between pages.
When a transaction is "in process," different activity views can show varied data.

Gust Equity Management

Description: SaaS equity management solution for startups providing easy issue options, valuations, financial modeling, and cap table management.

Best for: Startups

Pricing: Offers a free trial for new users. Three pricing ranges are available:

Start: $300/year

Accelerate: $1000/year

Raise: $3000/year

For more specific details, contact Gust Equity Management.

Evaluation of key criteria:

Ease of use: Yes, straightforward use, clean interface, helpful articles, and videos for guidance.
Electronic mode: Not known. Contact Gust Equity Management.
Advanced features: Yes, 409 A valuations, issue options, ASC 718s, customizable views, and shared access with stakeholders.
Security and privacy: GDPR compliance across the system is being worked on, but Gust uses databases through GDPR-compliant service providers (Heroku, AWS, mLab) for customer-sensitive information.

Pros:

Ability to handle complex admin work with ease
Suitable for startups as it helps them eliminate expensive legal costs
Easy-to-use intuitive tool

Cons:

Absence of a transactional component.
No notifications for issues that need attention.

Equity Effect

Description: Now, Diligent Equity, Equity Effect is the only fully-integrated portfolio and cap table management platform providing tools to discern the accomplishment of all investments, companies, and funds.

Best for: Private companies, private equity and service providers, Venture capital, small to medium-sized enterprises.

Pricing: Prices vary for Investors, Private companies, and service providers. Contact Equity Effect.

Evaluation of key criteria:

Ease of use: Easy to use for small- to medium-sized startups that need constant data verification. Upgrades of these features are in progress.
Electronic mode: Not known. Contact Diligent Equity.
Advanced features: Yes, KPI and ESG Metrics Gathering, Next Round and Waterfall Modeling, 409 A valuations, advanced reporting
Security and privacy: Compliance with the EU-US Privacy Shield Framework and the Swiss-US Privacy Shield Framework.

Pros:

Facilitates extensive database management daily.
Waterfall analysis and scenario models for gaining greater clarity on all aspects of the startup's market value.
An accurate view of fund accomplishment

Cons:

Lacks more customizable tearsheets
Saved changes may be lost at times.
As it is based on pre-money, post-money valuations may experience a disconnect.

Capdesk

Description: Europe's leading equity management platform that allows private companies to share equity with investors and sanctions shareholders to trade equity without going public.

Best for: Growth companies.

Pricing: Offers three plans.

Start: £50/month +£ 4.80/employee on a share plan, paid annually, and £60+ £6/employee on a share plan, paid monthly

Grow: £95/month+£4.80/employee on a share plan, paid annually, and £120/ month+£6/employee on a share plan, paid monthly

Scale: Prices can be tailored according to your needs.

Evaluation of key criteria:

Ease of use: Yes, with health checks marking gaps and issues companies have, simple routine tasks.
Electronic mode: Yes, allows electronic option grants
Advanced features: Compatible with U.K. filings at HMRC and Companies House.
Security and privacy: When your data is exported outside the E.U., sometimes, Capdesk ensures the data exporter is EU/US Privacy Shield Framework certified (for U.S. subcontractors).

Pros:

Issuing share certificates and exporting cap tables is pretty simple.
Ability to create varied vesting on EMI
Good option management.

Cons:

Does not have the provision to create custom reports.
Confusing U.I.
Light documentation and refreshing do not always live up to the purpose of creating new categories of documents.

GEMSpm (formerly OPTRACK)

Description: Web-based solution handling the complete accounting of equity tools

Best for: Startups, as well as established companies

Pricing: Three plans are available at varied prices.

Ramping Up: Comes with a free 90-day trial, priced at $90/month, billed annually after free trial.

Scaling: $200/month billed annually+ $2/participant/month with a one-time setup fee

Mature: $600/month billed annually + $2/participant/month with a one-time setup fee

Evaluation of key criteria:

Ease of use: Yes, with real-time updates and a simple application process.
Electronic mode: OPTRACK application tracks equity instruments completely.
Advanced features: Yes, waterfall analysis, financial reporting module, model future investment rounds
Security and privacy: Contact OPTRACK.

Pros:

The application tracks employee stock options, warrants
Ideal for both public and private companies
Excellent customer service

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