As equity transactions become more complex and frequent, cap table management for startups is not a question of choice. Especially given that the average startup adds 10-15 new stakeholders every year, and 85% of VCs note well-maintained cap table tracking as the primary point in investment decision-making.
Proper cap table analysis gives an eagle-eyed view of regulatory compliance, accurate company valuation, tracking of ownership stakes, and investor confidence. Given the critical role of cap table management for startups, numerous options exist. For example, Carta supports over 40,000 companies, and over 3,000 startups use Pulley. Ultimately, both cap table software options reduce manual errors and save up to 50% of stake management time.
If you’re ready to take control of your equity and improve your chances of successful fundraising, discover the best software for cap table management for startups in 2024.
Best cap table management software options
If you don’t know which cap table software tool to choose for running your business, start with these most popular options in the market:
1. Carta
Carta is one of the market’s most popular tools for cap table management for startups. More than 40K customers use Carta, including top dogs like Calendly, Plum, and Trustpilot. Carta helps startups manage their equity, track valuations, and solve compliance issues.
Features:
Simple cap table tracking
Easy to manage employee equity
Automated valuation and compliance tracking
Safe and secure document storage
What-if scenario modeling tools
Easy SPV creation and management
Simple EMI setup process
Pricing:
- Carta’s cost starts from $280 per year
Pros:
User-friendly interface
Decent customer support
Integrations with other financial tools
A cool feature set
Cons:
- This capital management software may take many dollars. That’s why it can be quite expensive for early-stage startups or small companies
Perfect for: Large enterprises, international companies, scaling startups, and VC funds
2. Cake Equity
Cake Equity makes cap table management for startups much easier. It helps companies issue shares, track ownership, and comply with local regulations. This user-friendly platform is a good option for early-stage ventures and growing companies.
Features:
Simple cap table tracking
Employee stock option plan (ESOP) management
Tools for real-time scenario modeling
Valuation tools for audit tracking
Cross-border compliance for international teams
Pricing:
- The prices start from $40 per month
Pros:
A good choice for early-stage startups
Intuitive interface
A free plan for small startups
Cons:
- Cake’s cap table solutions may not be the best option for large companies because of a limited feature set
Perfect for: Early-stage startups, small businesses, and growing teams
3. Eqvista
This cap table management platform makes it easier for startups to know who owns what in their company. If you want to track your equity in a simple and affordable way, choose Eqvista. Many founders like its intuitive design and simple layout.
Features:
Detailed cap table management for startups
Easy to track vesting schedules
Easy to manage employee stock options
Real-time company valuation
Pricing:
Free for startups with up to 20 shareholders
Custom pricing for larger companies
Pros:
Cost-effective
User-friendly interface
Detailed reporting options
Cons:
- If you compare it with other cap table software tools, Eqvista has limited advanced features
Perfect for: Startups and large corporations
4. Pulley
Pulley is a popular cap table management platform with over 3,000 startups on board. It helps companies track ownership, prepare for future fundraising, and keep all employees’ shares in line.
Features:
Cap table management for startups
Scenario modeling
Easy planning of employee equity
Tools for fundraising activities
Pricing:
Free for companies with up to 25 stakeholders
Paid plans start at $100 per month for larger companies
Pros:
Simple user experience
Flexible pricing plans
Affordable prices
Cons:
- It may be hard to sync Pulley with other tools or platforms
Perfect for: Startups based primarily in the US, but it can also be a good option for international companies
5. Shareworks
Shareworks, formerly known as Capshare, can help you save up to 50% of your ‘business time’, which you can spend on other important stuff, such as making your business plan more solid or your pitch deck more appealing to investors. Shareworks is an affordable option for cap table management for startups, especially the small ones or those at the early stage of development. This tool will help you issue stocks and avoid manual errors, allowing you to handle your VC cap table perfectly.
Features:
Cap table management for startups
Simple tracking of you employees’ equity
Tools for compliance and reporting
Scenario analysis
Pricing:
A free trial with limited features
A paid plan costs $3.00/month
Pros:
Makes your equity decisions faster and more effective
Gives real-time insights
Helps you align your equity management with legal and tax regulations
Offers a free trial
Cons:
May take longer to upload large cap tables
Many users find Shareworks less developed, especially compared to Carta
Limited free features
Perfect for: Growth companies and startups that want to change from a spreadsheet
6. Gust Equity Management
This cap table management platform makes complex equity decisions easier and simpler, which is so important for early-stage ventures. This tool may help you track your cap table, stock options, and fundraising activities.
Features:
Cap table management for startups
Secure storage for legal documents
Tracking of regulatory compliance
Pricing:
Free for startups
Paid plans start at $120 per year
Pros:
Even early-stage or small startups can afford this tool
User-friendly interface
Can integrate with legal and financial tools
Cons:
- There are not so many features for large companies
Perfect for: Early-stage or small startups
What is cap table management for startups?
When starting a company, you first must deal with all the serious stuff, like choosing an entity type, legally establishing your company, and creating a VC cap table.
A capitalization table (or simply a cap table) is a detailed spreadsheet or a database that tracks all the company’s securities—equity ownership, convertible notes, options, and warrants—who holds them and the size of their stake. In other words, it’s a detailed list of who owns what. However, with time, your cap table tracking gets more complicated. That’s why it’s a good idea to use the capital management software we’ve listed above to make your business journey easier.
Cap table management for startups: three main principles
When thinking about your VC cap table, you must know the answers to three main questions:
What does a cap table track?
When should you create your company’s cap table?
What’s the right way to create your company’s cap table?
Let’s answer all three step-by-step.
What can you track with a cap table?
First of all, there are different types of ownership you give to your shareholders with your cap table tracking all of them. For example, some of your shareholders get preferred shares (shares with special rights and preferences), others may get common shares or even convertible instruments such as convertible notes and SAFEs. Second, a cap table documents the ownership amount—the percentage of each shareholder’s stake and the number of shares they own. Third, with your VC cap table, you’ll know the value of everyone’s shares. Fourth, it tracks when and how your shareholders can exercise their ownership rights. Finally, a cap table shows how each shareholder will get paid if there’s a liquidity event.
If not tracked properly, your cap table can get really messy really fast. However, with cap table management platforms, you won’t have this problem. Everything will be neat and accurate.
When to create a cap table?
Thinking that you can deal with cap table management for your startup later on because you’ve just started your company isn’t the best idea. The earlier you get your cap table template, the better. Starting cap table tracking from day one will save you a lot of time and money that you’d otherwise spend on lawyers down the road. A simple wisdom is to create your cap table (or use cap table software to make your life easier) as soon as you legally create your startup.
Why is early cap table management for startups important?
When we’re talking about early cap table tracking, dilution is always at the top of mind here. Ownership dilution is a pretty complex concept, and you need to know it well, as it will likely happen anyway. So, better get your VC cap table prepared early on. To understand dilution, let’s think about your company’s equity as a pie with each shareholder getting their slice.
For example, you and your friend started a company and authorized 10 million shares. However, you’ve issued only 9 million and distributed them either evenly or proportionally between you two, having left 1 million shares for other shareholders in the future. At this very point, your VC cap table looks as follows: you own 55% of the company (4,950.000 shares) and your friend—45% (4,050.000 shares). Pretty simple.
But with time, you decide to hire an advisor and, as your company doesn’t generate revenue yet and you don’t have money to pay to this person, you give this advisor 100,000 shares (from that 1 million authorized but not yet issued shares). Has the cap table management for startups changed at this point? Sure! Because here, the magic of dilution happens.
The good news is that the number of your shares doesn’t change (in your VC cap table, you still own 4,950.000 shares and your friend—4,050.000 shares), but the percentage of your ownership has decreased. Instead of 55% and 45%, you now have 54.39% and 44.50%. Why? Because the new shares have been issued and added to the general shares pool. Coming back to our comparison with the pie, your slice does not grow as the pie isn’t getting bigger—just more slices are added.
Later on, when investors start funding your company, they won’t take your shares either, but they will dilute your ownership of the company, making your percentage stake lower. This is where your cap table analysis will get messier. If you’ve been trying to manage your cap table in a spreadsheet up until now, it’s time to switch to cap table management software or even cap table management companies.
It’s important to note that during fundraising, you must be very attentive while negotiating a deal with investors. Look at such things as pre-money valuation and post-money valuation of your company because if you make the wrong choice, it may dilute your ownership even more, and your cap table tracking will get even worse.
Let’s enter a hypothetical scenario. You’re going to secure your Series A round. Investors tell you that they’ll give you $4 million on a $14 million post-money valuation. It means that investors will get a 28.5% stake in your company. Quite a good deal. But what if investors tell you that they’re giving $4 million on a $14 million pre-money valuation? In this case, their stake in your company will be 40%. Looks a lot worse. That’s why you should always decide wisely.
What’s the best way to create your company’s cap table?
Cap table management for startups usually takes two ways:
Hire a lawyer, and they’ll handle everything for you.
Do it yourself, either using a spreadsheet or any of the best cap table management software platforms we’ve listed at the beginning of this article.
Choose whatever suits you best. However, you must remember that as soon as your company starts to grow and get funded, your ownership will be diluted more and more, and it will become harder to track everything in a self-managed spreadsheet. That’s why it may be better to think about capitalization table administration services from the start.
What is cap table management software?
Cap table management software is a tool that helps companies track and manage their equity ownership. With new funding rounds, stock option grants and other deals can change over time. To avoid misunderstanding of who owns what and in which percentage, startups can take advantage of cap table software tools. As a result, it will get easier to track ownership stake, handle dilution, plan for fundraising, and ensure compliance.
What does cap table management software do?
Cap table management for startups gets much easier with the tools mentioned in this article because you can:
Cut the error rate for your calculations. Shares might fall through the cracks, especially when a company splits among hundreds of investors.
Stay compliant. Cap table management software helps you keep up with the latest local laws and maintain exact records. It also helps you complete all your paperwork, which is especially helpful if you are heading to the IPO.
Speed up legal help. Many cap table management companies fill out the needed legal papers with your information. Some even let you reach out to lawyers right through the platform.
Handle paperwork for your ownership records, like managing documents about who owns what in your company.
Keep one official record of your ownership structure to avoid confusion or arguments about who gets what if the company gets sold.
Speed up fundraising by showing investors a clear breakdown of ownership stakes and voting rights in your company. This will help them see your business as open and reliable.
How to choose the right cap table management software?
Consider the following factors to choose the best equity management software:
Cost. Since super early-stage companies are usually cost-conscious, it’s better to opt for a free trial and transparent, tiered pricing software. As the company grows and the management process becomes more complex, it makes sense to pay for a more tailored package and comprehensive toolkit.
Support for common securities. Choose a capital management software provider that can handle preferred stock, restricted stock, warrants, SAFEs, and convertible notes. Some newer providers can’t manage pre and post-money notes. Thus, always ensure that the provider supports the securities you issue.
The legal review question. Most early-stage startups rely on their law firms to manage the cap table. For instance, in Series A startups, this is standard practice. Ask your law firm which tools for cap table management for startups they recommend. But feel free to suggest alternatives if their preferred tool doesn’t suit your needs.
FAQs
Do I really need cap table management software?
Yes, especially once a company receives outside investment or issues stock options. At that point, cap table management for startups becomes paramount as a cap table is one of the most important legal and accounting documents.
Who manages the cap table in a startup?
Cap table management is a task for founders if we’re talking about the early stages. This is simply because they are the ones who raise funds and [communicate with investors](/investor-relations-services/). However, as soon as a company starts to grow and its cap table becomes larger and messier, it’s better to pass it to an in-house expert, CFO, or VP of Finance.
How do I structure my cap table?
The easiest way to ensure cap table management for startups is to use verified cap table software. It automates the whole process, and you don’t need to worry about putting all the data in line yourself. However, if you want to try to manage your cap table yourself, here’s what to do:
List all the shareholders in your company, including the creators, the workers, the investors, etc.
Enter the exact number of shares each owner has. This helps figure out who owns how much.
Differentiate shares and list their types (e.g., common shares, preferred shares, convertible notes, warrants, etc.).
Are there any free cap table management software tools?
Yes, there are some free cap table management software options. Check Carta, Pulley, or Cake Equity, for example. They all offer free plans for smaller cap tables (startups with limited shareholders).
Which capital management software is better: Carta vs Capshare?
Startups like to use Carta and Capshare (now known as Shareworks) for cap table management. If we’re talking about scaling ventures, it’s good to choose Carta because this tool has more features and a better interface. However, this cap table software gets pretty expensive pretty fast. If you’re a first-time founder or run a small business, this service may be a bit expensive for you. In this case, think about Shareworks. This platform also offers solid cap table management for startups but for fewer dollars.