Goodbye Excel, hello Ledgy: Entering a new era of cap table and portfolio management

Companies, Insights

12th May 2020

“In times of AI and drones it’s impossible to imagine that shares in private companies will still be managed with spreadsheets in 5 years”

This statement, included in the pitch deck of Ledgy we received back in 2018, triggered an intensive internal discussion. Because yes, isn’t it ridiculous that we as an early stage investor look at multiple new business ideas a day disrupting the status quo in fundamental industries, but when it comes to our own internal operations as a VC firm we use the same technologies as 20 years ago (a.k.a Excel)?

And we are not the only ones, postulating disruption potential in any sector, financing companies in highly advanced technologies such as air taxis (Volocopterand autonomous drones (Flytrex), but managing ownerships and fund administration — the backbone of our business — manually in detached Excel spreadsheets.

As a result, relevant investment information is spread across paper documents such as shareholder agreements, options grants as well as several Excel spreadsheets modeling the basics of any financing round.

That’s why we decided to actively shape the revolution on how ownership management works for private companies: We invested in and started to become a customer of the Zurich-based equity management solution Ledgy.

The equity management market is nascent in Europe today — so far largely limited to US players with enterprise solutions for later-stage startups and established corporates. No one has cracked the European market with its legal and regulatory peculiarities — so far!

Ledgy’s breadth of service offerings, as well as its unique targeting of European companies and its freemium pricing model make it a clear standout among its competitors for early and mid-stage startups. We love the nuanced and intuitive user interface, allowing users to perform time-consuming tasks like sending out holding confirmations to all shareholders at the press of a button, while also offering top-of-the-line cap table management functionality.

While the majority of cap table software focuses on enterprise and US-based companies, Ledgy is great if you as a startup team just started out: it will be free to use with up to 25 shareholders in Europe. Ledgy’s premium version, on the other hand, scales to the more complex circumstances of even the largest startups. Features include, for example, the management of complex employee participation plans as well as streamlining fundraising and equity plans. As a result granting, exercising, termination, cap table and reporting tasks are put on autopilot.

Moreover, with its recently launched digital signature feature, a joint project with our portfolio company Skribble, Ledgy becomes especially in times of remote working an indispensable efficiency booster.

Speaking of efficiency booster: to supercharge any other workflow related spreadsheets within your organization, check out our portfolio company Layer which is building the central place to automate and manage workflows

With btov Partners not only being an investor, but also a customer of Ledgy, establishing Ledgy as the go-to platform for portfolio management is one of our main Objectives and Key Results (OKRs) for 2020.

As a first step, we onboarded each portfolio company of our Digital Tech fund. In doing so, the need for a single source of truth became even more visible — the process of adding all of our Excel-based cap tables into Ledgy took much longer than expected. Why, you might wonder? It’s simple: on a closer look, many spreadsheets, agreements, stock option plans are fragmented and lack version transparency. Further, different people have different modelling styles and individual preferences in Excel.

Thus, sifting through plenty of cap table versions, closing binders and other legal documents reinforced the importance of having a single source of truth.

Now — with our portfolio fully onboarded onto Ledgy — we can archive all of our old Excel sheets and get a real-time transparent overview of our current portfolio. We finally have one place to keep an eye on our stakes and the respective valuations. Just now, we also signed our first investment fully digitally using Ledgy and its integration with Skribble.

You won’t be surprised: we are quite excited about this revolutionary approach to equity and portfolio management. Thus, we are currently on a mission to spread the word about Ledgy, promoting its use among our portfolio companies as well as private investors from our btov network to bring all shareholders together on one platform.

Moreover, we are keen to accompany Ledgy along their journey, aiming for a vision that goes further than replacing paper records. Having created a network of companies and investors lays the necessary foundation to enable the transfer of securities and to build liquidity in a “private stock market”. Stay tuned — archiving “Captable_v97final.xlsx” is just the first step.

If you are a fellow fund investor, business angel or entrepreneur interested in this new era of cap table and equity management, we are more than happy to exchange thoughts, experiences and ideas. Please reach out to me anytime via ab@btov.vc.

 

This blog post was orginally published on Medium on May 12th, 2020.

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