Launching a startup is an exhilarating and often difficult journey. Successfully navigating the complexities and curveballs that are thrown your way is what will set you apart on your path to creating and running your business. One major aspect of running your startup is successfully managing your cap table. A cap table, short for capitalization table, is a comprehensive record of a company’s equity ownership structure.
In this article, we’ll take a close look at why cap tables are important for startups, discuss the recent issues with Carta, and run through viable alternatives to Carta for effectively managing your cap table.
Issues with Carta’s Cap Tables for Startups
Carta, which has been a prominent cap table management platform for years, has recently faced backlash for alleged unethical tactics. A customer accused Carta of attempting to broker a deal for a startup’s shares without consent. Even more recently, reports have come out suggesting that this is not an isolated incident. You can find the full article here if you’d like to read more.
This alleged lack of ethics raises concerns about the reliability of using Carta for cap table management. Knowing that a company you trust with information about your company and its investors is using that information to benefit without your consent is troubling for many businesses and owners. Luckily there are options out there if you do not feel Carta is right for you.
Alternatives to Carta’s Cap Tables for Startups
If you’re thinking about moving away from Carta after the recent allegations, then you will want another platform for cap management that can do the job just as well. Let’s take a look at some of the options that exist for your business.
Pulley
First up on the list of possibilities is Pulley. Pulley has emerged as a robust alternative to Carta, providing a sleek, user-friendly platform for cap table management. Pulley offers employee equity tools – including an employee view, equity calculator, equity compensation, and the infrastructure to support custom documents and forms.
Pulley also offers fundraising modeling to assist with equity rounds and legal workflow. Going even further to offer an in-house valuations team to assist with compliance and other legal documents that pertain directly to your needs. With all of this in mind, Pulley is certainly a viable option to use as your choice for cap table management.
Excel
Next on the list, we have Microsoft Excel. While Excel is not a specialized cap table management tool, it still remains a popular choice to this day due to its accessibility and cost-effectiveness for startups looking to save money.
One major downside of Excel is that it does not offer the automation and error-checking features present in the other dedicated platforms on this list. If you choose to go the Excel route for your cap table management, you must ensure meticulous data entry and validation. If this is something you feel comfortable with, Excel can be a great option for your startup. If not, one of the dedicated platforms may be worth the extra money.
Cake Equity
Cake Equity offers a dynamic, intuitive, and easy-to-manage platform that scales with your startup and offers simplified cap table solutions for every stage of your business’s growth.
Among the tools offered are:
- Scenario modeling
- Stakeholder communications
- Transaction history
- Equity management
Cake sets itself up as another great option for your business to use for cap table management. Similar to Pulley, cap table management is only the tip of the iceberg and these software solutions can offer even more value for your startup after funding rounds are complete.
Law Firm Management
If you would like to opt for a more traditional route, you can have a law firm manage your cap table. One perk of this option is that you are ensured professional oversight, but it does come with a higher cost attached. Another point to keep in mind is that using a law firm may not be as agile as using the cap table management tools presented in this list.
Having a team of legal experts you can reach out to with questions and concerns regarding your cap management may very well be worth the extra money to you and your startup. Keep this in mind when making your final decision.
Manage Your Cap Tables Effectively
A well-maintained cap table provides clarity on ownership structures, facilitates fundraising efforts, and ensures your startup is in compliance with regulatory requirements. Although there have been recent allegations with Carta, there are reliable alternatives for your startup.
As you embark on your entrepreneurial journey, choose a cap table management solution that aligns with your startups unique needs and priorities. Whether choosing Pulley, leveraging the simplicity of Excel, exploring the offerings of Cake Equity, or seeking professional assistance through law firm management, make an informed decision that encourages transparency as well as efficiency for your business.
At Pasquesi Partners, our team of experts understands the intricacies of cap table management. We are confident that we can help you create a custom-tailored cap management strategy centered around the needs of your startup. Contact us today to get started.