Cap tables, also known as capitalization tables, are one of the most essential documents that startups must possess. At one level, cap tables are spreadsheets that simply track the ownership structure of your startup, along with equity transactions, and other relevant information (e.g., investor details).
But on another level, cap tables serve as a reference point that guides founders, employees, and investors alike when making key decisions.
In that vein, cap table management software consists of specialized tools designed to help startups create, monitor, and update their cap tables. Unlike non-specialized solutions such as Excel, cap table software provides an efficient, streamlined way to manage cap tables and comes equipped with functionalities otherwise lacking in generalist solutions like scenario modeling.
When do startups need cap table management software?
Startups, regardless of size or how far they have gone through funding, should start using cap table management software as soon as possible, or whenever they begin issuing equity.
For early-stage startups, it may be tempting to hold off using a cap table management solution. After all, tracking equity transactions and changes early on is relatively straightforward given that startups are small and the number of investors (if any) is few. However, doing this manually or with non-specialist software such as Excel can quickly turn cap table management into a laborious process. Such an approach can also lead to human errors that can easily snowball into an avalanche of problems.
Startups going through Series A funding have considerably more complex cap tables. They may have hired numerous employees, onboarded multiple investors, and been looking into institutional funding (e.g. VCs). Keeping tabs on your startup’s ownership structure is crucial for internal and external decision-making, especially at this stage given what's at stake. This is why using a solution such as LTSE Equity is critical for staying on top of things.
Likewise, startups going through Series B funding will also have complex ownership structures. At this stage, you’re often well-established with proven business models, have considerable amounts of capital, and have a sizeable roster of employees and investors. Without cap table management software, managing and tracking changes in ownership and equity issuances such as issuing warrants will be challenging. And maintaining accurate, transparent records for both yourself and external stakeholders, such as potential acquirers, is crucial for a smooth exit.
Why do startups need cap table management software?
Cap table management software can help startups realize a whole range of benefits if used properly, irrespective of how far your startup has gone down the different funding stages.
Streamlines workflows: With the help of built-in forms and templates, repetitive tasks such as recording stock transfers and issuing options can be completed quickly, resulting in streamlined processes and easier monitoring of funding elements.
Automation: Time-consuming tasks such as managing vesting schedules and calculating equity ownership percentages can be automated along with built-in calculators and automatic error audits. This also helps reduce the likelihood of human error.
Provides a Single Source of Truth (SSOT): By providing an SSOT, cap tables are able to reflect real-time updates and ensure that all stakeholders have access to the latest version of your startup’s cap table at any time.
Compliance: Cap table software often comes with features that help startups stay on the right side of the law (e.g. Form 3921 readiness) in terms of regulations by providing the documentation required by several regulatory bodies such as the IRS.
Support: Good cap table software shouldn’t leave you on your own after purchasing. It could come together with excellent customer support, onboarding, and knowledge bases which you can refer to for guidance.
Things to consider when choosing cap table management software
Picking the right cap table management software for your startup can be tricky, especially since different solutions can appear deceptively similar. However, to make the right selection, you have to ask yourself the right questions:
Is it easy to use?
Your cap table management software could have all the functionalities in the world. But if the learning curve is unreasonably steep, it might as well be useless. A good tool is one that is accessible with a user-friendly interface so you can spend more time on other important areas such as fundraising and networking.
Will it scale with your startup’s growth?
As startups grow in size and begin to secure investors along with employees, it's important that your software can handle the increasing complexity of your startup’s ownership structure. Some solutions are designed for early-stage startups, whereas others are suitable for more mature startups—so be sure to consider the scalability of your tool early on to avoid problems down the line.
Will there be support for you when you encounter issues?
Encountering issues when using software shouldn’t be surprising. Not getting the help you need should. Good software goes hand-in-hand with reliable customer support either in the form of detailed knowledge bases or quick-responding customer service teams.
Is it appropriate for your budget?
Not all cap table management software is created or priced equally. Before settling on a tool, ensure that you carefully balance out its pricing alongside the value it brings to your startup to gauge if it has the right amount of functionality. Remember – expensive doesn’t always mean better as some options may be overkill for your needs!
Will it address your reporting and compliance needs?
Good cap table management software should help startups ensure compliance with relevant regulations. Alert systems that remind you to submit reports to regulatory bodies as well as annual cap table health-check ups are examples of relevant features that are invaluable.
Does it come with scenario modeling?
A reliable cap table management software should enable you to visualize various scenarios and projections, enabling you to evaluate the impact on employee ownership and overall company equity.
Top cap table management software
Choosing the right cap table management software for your startup can be challenging, given the abundance of options in the market. That said, let’s take a closer look at some of the most popular options:
As one of the most well-known and established cap table management software solutions used by countless startups, Carta offers a staggeringly extensive range of functionalities that can support even the largest of startups.
Wide-ranging capabilities: Carta comes equipped with a comprehensive range of powerful functions and features that can support large companies and startups.
Simple user interface (UI): The intuitive, visual, and customizable UI makes it easy for users to find the information they require and do what they need to do.
Extensive documentation: Carta provides extensive documentation and blog resources to help users understand the product and learn more about relevant topics.
Expensive: Carta can seem unaffordable to smaller startups with limited resources. Additionally, their pricing is not always fully transparent and may include hidden fees and unexpected price changes.
In-house 409As: 409A valuations are done in-house as opposed to an external, independent third-party appraiser.
Excessive functionalities: Carta’s large range of functionalities is overkill for most early-stage startups.
While relatively new compared to more established names such as Carta, Pulley is rapidly making a name for itself among countless startups due to its commitment to providing a simplified, user-friendly solution for startups.
Clean, intuitive UI: Pulley’s well-designed interface makes it easy for users to start quickly.
Startup-focused: The platform is specifically designed to meet the needs of early-stage startups and provides tailored customer support and educational resources.
Good customer service: Pulley has an excellent customer service team who are well-equipped to address their users' pain points.
No cap table health checkups: Unlike alternatives like LTSE Equity, Pulley does not provide cap table health checkups, leaving the onus on the startup to ensure compliance.
Limited modeling abilities: Pulley's modeling capabilities are relatively limited compared to other solutions as they only include waterfall modeling for their custom plan offering.
Slow onboarding: Onboarding can take up to 10 days which is relatively slow compared to competitors.
Eqvista leverages its extensive business valuation experience to create a solid, cloud-based cap table management platform that provides users with wide-ranging functionalities along with a user-friendly interface.
Valuation expertise: Eqvista is well-versed in conducting valuations, from 409As to company valuations.
Straightforward UI: The user interface is straightforward and user-friendly, making it easy to find the required information.
Advanced capabilities: The software includes advanced tools and services. Reporting features require minimal manual entry, and it automatically imports and compiles data from multiple sources.
Lacks key functions: Essential features like waterfall and financing round modeling, 409A valuations, and cap table setup are not included in the base plan. Companies are required to sign up for their premium plan to access these features.
In-house 409As: 409A valuations are done in-house instead of being performed by accredited external valuers.
Not suitable for early-stage: Eqvista may not be the best for beginners or startups. Its reporting and valuation features cater to companies in later stages of growth, and its freemium plan requires startups to pay for basic support such as setting up.
Although AngelList has been around for over a decade, it has only been in the cap table management market since 2021. That said, its comprehensive all-in-one solution is quickly gaining traction among founders who are looking to start fundraising.
Combined offering: AngelList’s new stack equity offering combines equity and cap table management, business banking, and advisor equity grants into one service.
Startup recruitment: AngelList is best for startup recruitment. It is a great alternative to LinkedIn for job seekers who are looking for positions offered by startups and investors who are looking for opportunities.
Networking: AngelList connects entrepreneurs to investors. Its fundraising process introduces startups to experienced investors and venture capitalists who can help review their business and approach.
Limited cap table functions: While AngelList has many features related to fundraising and networking with investors, equity and cap table management are an afterthought. Its Stack Equity Management is meant to fill a gap and support its investment features.
Expensive: AngelList can be expensive for large teams. Its pricing is based on the headcount of stakeholders, including employees with shares.
More focus on recruitment/networking: Equity management is offered as part of an all-in-one solution or stack that will be redundant for startups with their own HR and banking systems.
Shareworks is a comprehensive and innovative equity management platform that revolutionizes the way startups manage their employee stock plans. Their workplace financial solutions and services help startups drive workplace performance and attract/retain talent.
Mobile Access: There is a mobile version which allows users to quickly access their portfolios without a desktop or laptop.
Comprehensive dashboard: Sharework's dashboard readily displays critical information that can be quickly read with a glance.
Specialized Guidance: Shareworks offers white-glove service from a dedicated group of specialists to help support a startup's equity plans and employees.
In-house 409As: 409A valuations are conducted in-house as opposed to an external, independent third-party valuator.
Slow interface: There have been several concerns and complaints over the slow speed of Sharework's interface.
Poor customer support: Multiple reviews have complained that they lack the ability to resolve issues at times and take excessive time in addressing problems.
Driven by the goal to enable mission-driven companies to succeed at every stage of their journey from seed to series to beyond, LTSE Equity’s solution offers an affordable and transparent pricing model to deliver an appealing solution.
Ideal for startups wanting to scale up: LTSE Equity combines basic cap table management functionalities along with advanced features such as modeling and cap table health checkups to support startups at all stages.
Affordable and transparent: Pricing is transparent and affordable, with three founder-friendly plans that can suit any need.
Choose between 409A valuators: LTSE Equity is the only platform in the market where founders can choose from multiple reputable 409A providers.
No LLC support: At the moment, LTSE Equity does not natively support LLCs, though they can be shoehorned with the right steps.
Heavy focus on cap tables/equity management: LTSE Equity focuses on cap tables and equity management. Extra features, such as board consent applications and on-payment exercises, are not yet available and are still being developed.
No Rule 701 management: While it can support Rule 701 analysis, LTSE Equity is not capable of conducting Rule 701 management.
Top reasons founders choose LTSE Equity
When it comes to managing a startup’s cap table, it is undeniable that potential customers have a wealth of options to choose from. That said, LTSE Equity remains the go-to solution for well over 30,000 startup leaders for good reason. Here’s why:
Easy-to-use platform: We offer one of the best user interfaces and experiences, based on numerous reviews. LTSE Equity provides powerful features along with a simple interface to ensure ease of use and other helpful tools, allowing users to spend more time managing their cap tables instead of getting up to speed with the platform.
Scalability: Our solution is used by startups of all sizes and stages. From 409A valuations to Form 3921 readiness to modeling scenarios and managing option pools, LTSE Equity is extremely scalable and ready to support startups throughout their entire journey from seed to series.
Exceptional customer support: Our customer support team is unparalleled. The team of dedicated experts at LTSE Equity provides our users with the attention and knowledge needed to address any question or issue that may arise, empowering them to succeed on our platform.
LTSE Equity FAQs
What makes LTSE Equity different from other platforms?
LTSE Equity is created by founders, for founders. Our full suite of equity management features reflects our real-life experience and insights, empowering your startup to prosper and endure.
How much does LTSE Equity cost?
Our pricing is strictly founder-friendly and scales as you grow. Our plans are also completely transparent, with no hidden costs or surprise price hikes.
The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Information about the company is provided by the company, or comes from the companies’ public filings and is not independently verified by LTSE. Neither LTSE nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding LTSE-listed companies are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. Advice from a securities professional is strongly advised.
Sign up for start up insights, straight to your inbox
Oops! Something went wrong while submitting the form.