This is the right time to outsource your cap table administration.
Are you wondering if, or when, is right time to get help with your cap table? Maybe you’re not quite ready to hire someone full time, but it’s more work than you’d like to do yourself. Whether you’re the CFO, GC, Chief People Officer, or any other role that oftentimes manages the cap table, there is no doubt you have many other priorities to focus on, and sadly the cap table oftentimes gets pushed to the bottom of the to-do list (though it’s one of the most important parts of your business).
These are some times when you might consider hiring an external firm to help with equity administration:
You’re the founder and the sole executive, leading the company in the earliest stages. At this point you have enough to think about, and typically your attorney manages your cap table - but we all know how expensive attorney fees are. Why not opt instead to have your attorney focus on the legal paperwork and advice, and hire an external firm to manage your cap table? At this stage, the admin work will be very inexpensive.
After you raise your first (or second or third or fourth or fifth) round of financing. Especially during your company’s early stages, this is where the majority of your cap table administration will come in - as soon as you close a financing round and need to update your cap table with new investors. It will be much more cost-effective to have an equity admin firm help you do the updates.
When you begin to have enough ‘part-time’ work on the cap table, but you’re not ready for a full-time Equity Admin. You may begin to notice that board consents, new option grants, terminations and stakeholder updates are taking up a bit more time than they used to. It’s best to get some help from an outside firm so that you can re-focus on the top priorities for your role.
After you hire your first Equity Administrator (which may seem counterproductive, but hear me out). Equity is a fascinating world that comes and goes and ebbs and flows. Sometimes there isn’t much work to be done, and other times there is way too much. As soon as you’ve hired your first full-time Equity Admin, it may be helpful to contract an external firm who can help ‘fill in the gaps’ when the work gets to be too much for your new employee. The firm would only help out when your internal Equity Admin has too much to get done in too little time. In these cases, make sure to find a firm like Equity Admin Co. that has no minimums or maximums on the hours they’ll work for you, and will only charge you for the time they help.
When you’re ready to go public (and after you’ve gone public), or looking to get acquired. This is one of the most important times to have an external equity administration firm working with you. There is so much equity work - auditing, updating, modifying - that needs to get done during this time that you’ll need to hire external help regardless of whether or not you have a full-time Equity Administrator. It’s too much for one person to handle (sometimes too much for two!) and you want to make sure your cap table and equity plan(s) are absolutely perfect.
As you can see, it really is your choice when you’d like to hire an external equity admin firm to help you with your cap table. There are pros to doing so at every stage of your business. Please remember the importance of your cap table - especially if you plan to go public or be acquired or even raise funding. 95 - 99% of our clients come to us needing major audits done because they aren’t sure how accurate their cap tables are. We love the audit work and are always happy to do it, but we also want to emphasize the importance of cap table accuracy throughout the life of your business. Be in that 1-5% that understands the importance and hires help early on.
Reach out today if you’re ready to discuss your cap table administration or if we can help you with any questions.
