With the growing amount of stakeholders on the cap table, managing equity has become critical for startups in 2023. Cap table management tools have become essential as organizations strive for growth and rely on the remote workforce. Even though an array of options is available (yes, there are plenty Carta alternatives out there), selecting the right tool can be daunting. This article will delve into the seven best cap table management tools of 2023, equipping you with the knowledge to make informed choices. Whether you're looking to set up your option plan, keep track of your shareholders, educate your team on employee stock options, or navigate through complex liquidity events, these tools are tailored to assist you at every step of your equity management journey.
What are cap table management tools?
Let's cover the basics first. Cap table (or equity) management tools help startups handle shares, employee stock options, and similar equity-related instruments. Essentially, such software is designed to ensure everyone gets their fair share of the company pie and the company can keep track of what's happening. With these tools, you can create and manage stock option plans, distribute shares to team members, and keep track of who owns what. They're also handy for explaining how employee stock options work to the team and ensuring that employees see and understand their value. Furthermore, these tools can prove invaluable during liquidity events, helping companies navigate stock sales, mergers, or acquisitions. Cap table management tools provide the necessary infrastructure and support to optimize equity-related processes, ensuring that a company's ownership structure aligns with its strategic goals and evolving needs.
When is the best time to start using cap table management tools?
The timing for when you should start using cap table management tools can vary depending on your specific business circumstances. Here are a few key points to consider:
- Early Stage: For many startups, it's a good idea to start thinking about cap table management tools early on, especially if you plan to issue employee stock options or equity grants to employees, advisors, or investors. These tools can help you immediately set up your equity structure and ensure transparency.
- Growth Stage: As your company grows and you hire more team members or bring in outside investors, the complexity of managing equity also increases. This is a natural time to use cap ta management tools to streamline processes and maintain accurate records.
- Fundraising: If you're planning to raise capital through venture capital or angel investors, having equity management tools in place can be crucial. Investors often want to see that you have a system for managing equity.
- Compliance and Reporting Needs: If your business operates in a regulated industry or you anticipate going public, equity management tools become essential for maintaining compliance with reporting requirements.
- Liquidity Events: When preparing for a liquidity event like an acquisition or an IPO, having clean and organized equity records is crucial. Equity management tools can help you navigate these complex transactions.
Generally, the sooner you start using equity management tools, the easier it will be to manage equity as your company grows. So, it's good to consider implementing them early to avoid potential headaches.
What to look for in your cap table management tool?
To select the right cap table management tool, you need to consider the following features:
- Ease of Use: The tool should be user-friendly, with an intuitive interface that allows you and your team to navigate and use it without extensive training.
- Customization: Look for a tool to customize equity plans and structures to fit your needs. Flexibility is essential as your equity management requirements may evolve.
- Cap Table Management: Ensure the tool can handle cap table management effectively, including tracking ownership percentages, equity grants, and any changes over time.
- Stock Option Plan Administration: Check if the tool supports the creation, distribution, and management of equity plans, including employee stock options, restricted stock units (RSUs), and virtual stock options (VSOP).
- Scalability: Choose a tool that can grow with your company. It should handle a larger cap table and more complex equity structures as your business expands.
- Customer Support and Training: Evaluate the level of customer support, training materials, and resources the tool's vendor provides to ensure you can get help when needed.
- Cost: Understand the pricing structure, including any subscription fees or per-user costs, and how it aligns with your budget.
By carefully considering these factors, you can find a cap table management tool that aligns with your business needs and facilitates effective organizational equity management.
Top Cap Table Management Tools
Main Features: Carta is a U.S.-based comprehensive cap table management platform offering cap table plan management, investor updates, and scenario modeling. It also supports complex capital structures and transactions.
Pricing: You must contact sales to understand pricing for Carta's platform. A free plan is available for companies with up to 25 employees and less than 1m in fundraised capital.
Target User: Carta is best for U.S.-based companies, and it caters to companies of all sizes, from early-stage startups to mature businesses. You might want to look for Carta alternatives if your company operates out of U.S.
Features: Ledgy, a Europe-based platform, offers cap table management, employee participation plans, exit and round modeling, and investor relations services.
Pricing: Ledgy has a tiered pricing system with paid plans starting at €3 per stakeholder per month with a minimum of at least 25 stakeholders. A free tier for essential cap table management is available, with prices escalating based on the number of stakeholders and the level of service required.
Target User: With its roots in Europe, Ledgy is an excellent fit for European startups and growing businesses. However, its features and flexibility make it an attractive choice for companies from other regions.
Features: Vestd is a UK-focused platform offering cap table management, digital share issuance, and an automated option scheme. It provides access to independent, FCA-regulated advice about your share scheme setup.
Pricing: Vestd operates on a tiered subscription model, with prices starting from 25 and increasing based on the size of the company and the range of services required.
Target User: Vestd is a good fit for UK-based startups and SMEs looking for a platform that complies with local regulations and provides hands-on assistance with setting up share schemes.
Features: Pulley offers a simplified cap table management solution with features like cap table management, scenario modeling, and electronic share issuance.
Pricing: Pulley offers a free tier for companies with less than 25 stakeholders, with paid plans starting at 1,200 per year.
Target User: Pulley is ideally suited to early-stage startups and small businesses, particularly in the U.S., seeking a straightforward platform with a simple pricing structure.
Features: Cake Equity provides cap table management, share issues, and fully digital ESOP management. It also includes real-time scenario modeling and round insights.
Pricing: Cake Equity operates on a subscription model, with paid plans starting at 40$.
Target User: Cake Equity is an Australian platform focusing on early-stage startups and growing businesses.
Deel Equity Services
Features: Deel Equity Services offers cap table management, equity management, and compliance checks and supports multiple currencies and international contractors.
Pricing: You will need to contact Deel Sales to figure out pricing. It also goes hand in hand with their offering of employee-of-record services.
Target User: Deel is a choice for companies with international teams or those planning to hire across borders.
Features: Salto X makes employee stock options easy for the company and employees. It helps companies and early-stage founders set up and run option plans in simple steps and ensures that option receivers understand the value of the incentives they get. Besides its platform, Salto X offers handy tools that help founders and HR present options in job offers and their employees understand tax obligations in their jurisdiction. Lastly, it provides an AI-powered knowledge base that helps educate all stakeholders on key aspects of stock option management. Supported by a team of reward experts, this tool covers the baseline of stock option management.
Pricing: Basic option plan management features are available for free. On top of that, Salto X offers free access to handy tools like a total compensation calculator, employee stock options tax calculator, and its AI-powered stock options assistant. Additional services, like multiple option plans, employee accounts, legal templates, and access to stock option experts, are available for Growth plan users starting at 17$ per month.
Target User: Salto X is aimed at helping startups and businesses headquartered in Europe. The simplicity of its tools makes it an excellent choice for startups navigating cap table and option plan management for the first time. It also unlocks lots of value for employees and helps them understand the value they can get from their employee stock options.
As the landscape of business and remote work continues to evolve in 2023, effective cap table management can save lots of time for companies early on. The seven equity management tools highlighted in this article offer many features and functionalities to meet the diverse needs of startups and growing businesses. Whether in the early stages of your entrepreneurial journey or preparing for complex liquidity events, these tools provide the necessary support and infrastructure to ensure that your cap table management aligns seamlessly with your business objectives. Feel free to explore the alternatives and pick the one that fits you best.