Managing cap and equity tables in high-growth companies can be a complicated (and sometimes messy) business, a fact that founders and employees often discover too late. This has given rise to a wave of companies creating software to help, and today a European leader in this pack announces funding to fuel its own growth. Ledgy, a Zurich startup that develops cap table management software specifically for companies and their employees working in multiple countries, has raised $22 million, a Series B that it uses for hiring, developing products and to attract more users.
Ledgy’s platform today spans tools for finance, HR, legal and VC teams as well as the employees themselves, and is used both to provide a snapshot of a company’s capital status at any given time, and to help employees and businesses manage what they may choose to do with it over time. The company now has some 2,500 business customers, up from 1,500 a year ago, and its revenue has tripled, CEO and co-founder Yoko Spirig said in an interview.
Significantly, its rise coincides with an interesting time for European technology. We’re starting to see a lot more European startups choosing to stay in Europe to raise money and grow rather than grafting onto the US like they should have done in the past, and with that the issue of equity awards for these companies employees is only growing. Ledgy counts some of the biggest startups in the European ecosystem among its clients, including Peak, Getir, Kry, Monese, Selina Finance, Gorillas, Choco, Alan, Pennylane and Scalapay.
Ledgy itself has some impressive names on its own cap table. This round is led by New Enterprise Associates (NEA), with Sequoia Capital, Speedinvest, btov, Visionaries Club and Anonymous Angels also participating. Sequoia (as part of its much bigger move to Europe) led Ledgy’s $10m Series A a year ago, and with this latest round, NEA partner Jonathan Golden joins Luciana Lixandru of Sequioa on the Board of Directors. He has now raised $33.5 million to date.
Ledgy’s forte is working with companies that have employees located in different jurisdictions and creating a product for them that acts as both a finance and HR tool.
While a number of companies like Carta, and more recently AngelList and Pulley (respectively valued at $6.8 billion, $4 billion and up to $300 million for the young Pulley respectively) continue to make waves in the US market, Ledgy has spotted an opportunity to create scenarios where companies want to provide capital to international employees and need to balance regulatory and cultural differences in doing so.
“We started in a fragmented Europe, which was a curse and a blessing,” Spirig said. “It forced us to serve customers with international teams.”
Ledgy stumbled upon it almost by accident, Spirig said.
She and her co-founders (CTO Timo Horstschaefer and CPO Ben Brandt) were working on another startup in Zurich, in the area of security – “a Signal version of Slack” was Spirig’s catchy description. They were talking with another co-founder who showed them how he managed equity and his capitalization table: everything was on a spreadsheet.
“It was a huge Excel file,” she recalls, “and each share took up a single line.”
Dealing with that “was a complete nightmare,” she continued, but that wasn’t the only problem. Not only was the startup team located beyond Switzerland, but “ the team didn’t really understand what fairness was.
Surprisingly, there was no off-the-shelf product on the market to address this triangulated scenario: equity management, with tools for employees, that could be used in multiple countries.
“The way we approach this is different in that historically people were managing with paper, then Excel, then software like Shareworks,” Spirig said. “But in Europe, people didn’t understand the value of equity, so we wanted to make sure the employee experience was part of it. It is the transition from a purely financial product to a product that is also aimed at people. »
That founder and his company are still Ledgy customers, Spirig said.
Today, the company focuses heavily on primary equity and provides tools for companies and their employees to understand and manage this. This includes integrations with a third party, Semper, to manage secondary trades; Block and Numbers to reference the remuneration; and some 40 popular HR platforms used by companies to manage other types of compensation and benefits. It also opens the door to features and functionality that Ledgy might choose to build itself (or strengthen through acquisitions) in the future.
The fact that the company also covers services for the employees themselves is the kind of thing it hopes will also help it keep a moat around its business as companies like Carta expand their sites further. (Indeed, Carta acquired a UK competitor, Capdesk, earlier this year, which also built equity management for European companies, so we’ll have to watch that space. As Spirig pointed out when I mentioned Capdesk to him , it is present in Europe, yes, but it does not take up the challenge of simultaneously managing the equity of its clients in several international jurisdictions.)
“Through my lens as an investor at NEA, combined with my past experience at category-defining companies like Airbnb, Dropbox and Hubspot, I have seen the central role ownership plays in building sustainable businesses” , Golden told NEA in a statement. “The challenge of managing capital is particularly acute in Europe, with different legal structures governing capital in each country. Ledgy has created a smart and powerful equity software platform and built an incredible, best-in-class team to support it. Yoko, Ben and Timo understand the challenges businesses face as they evolve, and we’re excited to partner with the Ledgy team as they continue to reinvent the way businesses think about fairness and the property.
Updated with updated customer and revenue growth figures.