How to choose the right software for cap table management
The cap table is one of the most important documents in a company’s life. When you're managing fundraising, having the best cap table makes all the difference. Cap tables show investors and employees how much money is in the company, who owns that equity and what rights come from that ownership. Yet while incredibly important for a startup’s equity division, cap tables can also be both time-consuming and challenging to properly manage.
That’s why most startups turn away from spreadsheets, choosing to invest in cap table software and management tools instead. But with so many tools on the market today, picking the right one for your startup can be tricky.
In this article, we’ll go through the benefits of cap table software and how you can pick the right one.
Let’s start with the “why.” Cap tables are an essential document that businesses must consistently and accurately maintain but require time and effort to manage. Using cap table software significantly improves the management process and helps you more easily keep your cap table up to date.
Here are the benefits of using cap table software.
Creates a single source of truth (SSOT).
Spreadsheets force you to create multiple versions of your cap table. Cap table software, on the other hand, updates your cap table automatically, ensuring that no matter how many updates you make, you’ll always have just one cap table to refer to.
When your valuer asks for your cap table during a 409A valuation, you can send the latest documentation over with just a click of a button. In fact, some cap table software allows you to grant access to certain information to your valuer, and revoke access once they are done.
Cap table software enables you to record actions like transferring stock or issuing stock options easily with built-in templates and simple forms. This streamlines your process of monitoring important funding elements like grants, approvals, options, and stocks.
Makes it easier to manage finance rounds.
By leveraging cap table software, you can effectively stay on top of your equity division. You can also set it to calculate your overall ownership percentage automatically, so you’ll never lose track of your equity division during finance rounds.
Helps your startup remain compliant with laws and regulations.
Good cap table software is built with compliance in mind; not only will it notify you of any updates, but it will also assist in filling out your cap table, so you won’t miss important information. This should include Rule 701 analysis and Form 3921 readiness.
Customizable according to your startup's unique needs.
While templates are generalized and not scalable, cap table software allows you to customize your cap table to suit your needs and will scale with your company as you grow.
How to pick the right cap table software for you
It can be daunting to pick one out of the many options currently on the market. But here are six questions to consider as you browse.
Is it easy to use? Any new tool comes with a learning curve, but it’s important to pick a tool that you find easy to understand. Most software makes it easy to perform simple tasks like approvals, but make sure the same goes for more complex functions to avoid getting bogged down.
Is it affordable? Cap table software can be a significant investment, especially if you’ve been using spreadsheets. Look for brands that scale with your growth and are transparent with their pricing.
Is it secure? As your cap table contains sensitive information, you must choose software equipped with security features to protect your data. Consider options that offer different access levels and permissions so you can control exactly who has access to your cap table.
What features does it have? Most cap table software will offer a similar stack of features. Look for all-encompassing ones that can give you in-depth insights into your cap table, such as an annual health check or exit modeling.
What is the value it brings to my company? Choose an option that gives the most value for its price. Look for testimonials and success stories featuring customers with similar business profiles to see what value the software brought to their business.
Is it scalable? As your company grows, so will your cap table’s size and complexity. You won’t need all the bells and whistles at the start, so look for a full-stack solution that will scale with you from early-stage seed funding to Series A and beyond.
Why choose LTSE Equity
LTSE Equity is built by founders, for founders. We’ve been in the market since 2013, designing cap table software that helps support and guide startups along their funding journey. And now, over 36,000 founders have opted for LTSE Equity to help them manage their cap tables.
Here’s how we stack up.
Easy to use
LTSE Equity is simple and intuitive to navigate, with built-in tools to help you manage your equity and grow your company.
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.
Access to LTSE Equity is over a secure (SSL encrypted) connection, with backups stored offsite and encrypted using PKI cryptography. You can read more about our security and compliance features here.
We also provide different access levels and permissions so you can easily control the amount of information different stakeholders can access.
We provide the full suite of cap table management features and more.
Annual cap table health checks across all plans.
Audit-defensible 409A valuations from accredited third-party valuers.
Fully exportable and compliant with the Open Cap Table Coalition standards.
Advanced scenario modeling to help test new investment amounts and terms against dilution.
Boost customers report saving significant time and money. PostHog, for example, saves $20,000 in legal fees and more than 13 weeks of work per year using LTSE Equity. Read the case study.
We use tiers so that founders can choose the services that match their needs. For startups looking to scale, our Boost tier provides the best value and crucial features that meet your company’s fundraising and financial management needs. Not quite ready for rapid growth and accelerated fundraising? Get started with Fundamentals or Basic and upgrade when you’re ready to take off.
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.
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