Managing cap tables and equity in high-growth companies can be a complicated (and sometimes messy) business, a fact that founders and employees often discover too late. This has led to a wave of companies developing software to help, and today a European leader in the package is announcing some funding to fuel its own growth. Ledgy, a Zurich-based startup that develops cap-table management software specifically for businesses and their employees working in multiple countries, has raised $22 million, a Series B that it spends on hiring, further product development and used to attract more users.
Today, Ledgy’s platform includes tools for finance, HR, legal and VC teams, as well as for the employees themselves, and is used both to provide a point-in-time snapshot of a company’s equity position and to educate employees and to help companies do what they can choose to do with it over time. The company now has about 2,000 companies as customers, up from 1,500 a year ago, and revenue has doubled, CEO and co-founder Yoko Spirig said in an interview.
Significantly, his rise comes at an interesting moment for the European tech industry. We are beginning to see many more European startups choosing to remain in Europe to raise funding and scale rather than transplanting to the US as might have been expected in the past, and with it the issue of stock allocations for these companies. employees only grows. Ledgy counts among its clients some of the larger startups in the European ecosystem, including Peak, Getir, Kry, Monese, Selina Finance, Gorillas, Choco, Alan, Pennylane and Scalapay.
Ledgy himself has some impressive names on his own cap chart. This round is led by New Enterprise Associates (NEA), which also includes Sequoia Capital, Speedinvest, btov, Visionaries Club and Nameless Angels. Sequoia (as part of its much larger move into Europe) led Ledgy’s $10 million Series A a year ago, and with this latest round, NEA partner Jonathan Golden joins Sequioa’s Luciana Lixandru board. It has raised $33.5 million to date.
Ledgy’s sweet spot is working with companies whose employees are based in different jurisdictions and building 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 younger Pulley) continue to make waves in the US market, Ledgy has recognized an opportunity to build scenarios in companies want to provide equity to international employees and in doing so, they must balance the differences in regulations and culture.
“We started in fragmented Europe, which was both a blessing and a curse,” said Sprig. “This has forced us to serve customers with international teams.”
Ledgy came across it almost by accident, Spirig said.
She and her co-founders (CTO Timo Horstschaefer and CPO Ben Brandt) worked on another startup in Zurich in the security space – “a Signal version of Slack” was Spirig’s catchy description. They chatted with another co-founder who showed them how he managed equity and his cap table: it was all in one table.
“It was a huge Excel file,” she recalls, “and each share took up a single line.”
Doing that “was a complete nightmare,” she continued, but that wasn’t the only problem. Not only the startup team was based outside of Switzerland, but “that The team didn’t really understand what equity was about.”
Surprisingly, there was no off-the-shelf product on the market to handle this triangular scenario: stock management with tools for employees that can be used in multiple countries.
“Our approach is different in that people used to get by with paper, then Excel, and 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 that. It’s a move from a purely financial product to one that’s also not aimed at people.”
This founder and his company are still Ledgy customers, Spirig said.
The company today has a very strong focus on primary capital and provides companies and their employees with the tools to understand and manage it. These include integrations with a third party, Semper, to manage secondary business; Pave and Benchmark Compensation Numbers; and about 40 popular HR platforms used by companies to manage other types of compensation and benefits. This also opens the door to functionalities and features that Ledgy can build itself (or supplement through acquisitions) in the future.
The fact that the company also covers employee services itself is one thing it hopes will help it keep a moat around its business as companies like Carta continue to expand their locations. (In fact, earlier this year, Carta acquired a UK competitor, Capdesk, which also built equity management for European companies, so we’ll have to keep an eye on that area. As pointed out by Spirig when I mentioned Capdesk to her, it has a presence in Europe , yes, but it doesn’t rise to the challenge of managing equity for its clients in multiple international jurisdictions simultaneously.)
“Through my lens as an investor at NEA, combined with my previous experience at category-defining companies like Airbnb, Dropbox and Hubspot, I’ve seen the central role ownership plays in building enduring businesses,” Golden said at NEA in a statement. “The challenge of equity management is particularly acute in Europe, as each country has different legal structures for equity. Ledgy has created an intelligent and powerful stock software platform and built an incredible, world-class team to support it. Yoko, Ben and Timo understand the challenges companies face as they scale and we are excited to be working with the Ledgy team as they continue to reinvent how companies think about equity and ownership.”