Which cap table platform should we use?
Takeaway: I typically recommend Carta, particularly for companies that are going to raise money (and need a 409A valuation). Shareworks is also good and works just as well but I prefer Carta’s user interface.
Choosing the right capitalization management platform can be a critical decision for startups as they grow and raise capital. These platforms help manage equity ownership, track investment transactions, and generate reports for investors and stakeholders. I typically recommend that startups use either Carta or Shareworks. Here are some factors to consider when choosing a capitalization management platform.
Features: Different platforms offer different features, such as cap table management, 409A valuations, financial reporting, compliance management, and investor relations tools. Startups should assess their needs and choose a platform that offers the features that are most important to them.
Scalability: As a company grows and raises more capital, the complexity of its equity structure can increase significantly. Startups should choose a platform that can scale with them and accommodate a range of equity types, including common stock, preferred stock, and stock options.
Cost: Capitalization management platforms can vary widely in cost, from free tools for early-stage startups to more expensive solutions for larger companies. Startups should choose a platform that fits their budget.
Reputation and Customer Support: Startups should research the reputation of the platform and read reviews from other users. They should also assess the quality of customer support, as a responsive and knowledgeable support team can be critical in resolving issues and ensuring a smooth user experience.
Why Should I Use Carta or Shareworks?
Carta
Carta is a comprehensive capitalization management platform that offers a range of features, including cap table management, 409A valuations, financial reporting, and investor relations tools. Its user-friendly interface and intuitive design make it easy for startups to manage their equity ownership and investment transactions. Additionally, Carta has a strong reputation for customer support, with a responsive and knowledgeable team that can help startups resolve issues quickly and efficiently. With its robust features and excellent customer support, Carta is a top choice for startups looking for a comprehensive capitalization management platform.
Carta offers a free version of its platform called Launch for startups until they reach 25 stakeholders or raise $1 million (whichever comes first). When a startup grows out of the free plan and begins a paid contract, Carta’s plans typically include a 409A valuation, which can be a good value. Carta has a number of additional “add-ons”; some of these are good fits, some are not - ask your lawyer for assistance if you are interested in these.
Shareworks
Shareworks is a popular capitalization management platform for startups that offers a range of features, including cap table management, 409A valuations, and equity plan administration. It isn’t as user-friendly as Carta but for companies that have their lawyers handle the capitalization, this isn’t usually a problem. Its platform is highly customizable, allowing startups to tailor their cap table and equity plans to their specific needs. Additionally, Shareworks has a strong focus on security, with robust data encryption and other security measures in place to protect sensitive financial information. With its flexible platform and focus on security, Shareworks is a great option for startups looking for a reliable and customizable capitalization management platform.
Conclusion
Choosing the right capitalization management platform can be a critical decision for startups. By considering factors such as features, scalability, cost, reputation, and customer support, startups can choose a platform that meets their needs and helps them manage their equity ownership and investment transactions effectively.