Equity Management

How Important is Equity Management for Startups?

By Maric De Castro

January 30, 2023 | 1:06 pm

One of the main concerns of startups is raising capital that will be enough to keep the lights on for a year or two before they need additional funding.

After a series of thorough interviews, due diligence, and sending and receiving information back and forth, the day comes when you hear the words “we will fund you,” and the investment check arrives.

Equity structure changes when a startup completes a round of funding. How can a startup ensure correct equity management anytime ownership changes occur? How can it smoothly update and inform investors of the changes in the cap table?

Before we answer those questions, let’s take a refresher on traditional equity management.

How is equity management done?

For many startups, it’s usually the manual updating of the capitalization table (cap table). That’s if the start-up management team knows what to do.

Startups also have an Employee Stock Options Plan (ESOP), wherein early employees can own shares of stock in the start-up. Companies use ESOP as an incentive for employees to stay long-term and benefit from the growth of the company's value.

However, recording and monitoring become complicated when companies issue more securities in stocks, stock options, warrants, and convertible notes. So, how will the cap table and ESOP be implemented properly and effectively?

Good thing Carta is here. Carta is a multi-billion dollar San Francisco-based technology company that provides world-class cap table management and ESOP software to private companies and investors.

Carta's equity management platform has helped more than 35,000 companies and investors worldwide manage their equity from launch to exit, saving them time and money.

Carta and OneCFO PH partnership

At the start of 2023, Carta partnered with OneCFO PH to help startups in the Philippines gainfully manage their cap table and equity structure changes with Philippine law and tax-compliant arrangements powered by OneCFO’s tech-enabled services.

Carta OneCFO PH

OneCFO is the pioneering tech-enabled CFO services platform that Carta partnered with in the country.

Through this partnership, Philippines-based startups will benefit immensely from the equity management best practices that made Carta sought-after.

At the same time, the partnership ensures the necessary localizations and customizations as required by regulations in the Philippines - from SEC compliance, accounting, financial reporting, and taxation for the Company and its employees.

OneCFO PH has a better understanding of the Philippine laws, regulations, and market that affects small businesses up to fast-growing tech startups. OneCFO PH is in the best position to offer as one package a Carta-enabled cap table management and advisory services - from registration, set-up, and execution.

Why Carta’s software is what Philippine startups need

Automated and up-to-date reports

Manually maintaining different spreadsheets on equity data can be tedious, time-consuming, and prone to errors. The files need an update each time new investors come in, or new securities are issued.

It can also be costly, especially when misunderstandings between investors, founders, and their employees arise due to error.

Carta’s equity management software automatically updates the company’s cap table and employee stock options. Through Carta’s software, manual data entry of the cap table through different spreadsheets is avoided and lessens the risk of committing errors.

The cap table is up to date and compliant with every issuance of electronic securities.  In addition, investors and employees get the help needed in exercising options and tracking vesting schedules.

Carta’s powerful software allows founders and their management team to focus on their operations and customers instead of managing equity structure and responding to investors' queries on changes.

Efficient monitoring of equity structure changes

The software also minimizes time monitoring ESOP - from issuance to exercising options. Prompt updating of the data on the platform for additional fundraising activities affecting the equity structure also occurs.

Carta’s equity management software helps monitor these movements. Companies also avoid paying expensive legal fees or cleaning up the cap table as it always stays compliant.

In Conclusion

To set up your startup’s success, take advantage of the right tools and resources that Carta and OneCFO PH offers.

Whether raising capital, undergoing an audit check, or finding an exit strategy, having Carta and OneCFO PH provide the support makes equity management agile, efficient, and reliable.

Would you like to learn more about how Carta and OneCFO PH can help your startup? Contact OneCFO PH and enjoy a partner discount when you avail of Carta’s equity management software.

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