A Korean startup called QuotaLab is trying to follow in the footsteps of Carta, a cap table management company used by many American startups and investors.
Carta started life as “eShares” in 2012 as a capital table management service that startups could use to issue stock to investors and employees. Currently, its stable service offering has expanded from valuation and stock management to bookkeeping, risk assessment, and brokerage services. The company also operated a secondary stock market that investors could use to trade shares in startups, but shut down that service earlier this year after a bit of controversy.
QuotaLab, an AY Combinator alumnus, also started as a stock management service (called QuotaBook) for Korean startups and investors. As the post-merger integration of LogosSystem, an investor fund management service, nears completion, the company aims to become a one-stop shop for Korean startups and investor communities to manage their funds, stocks, investments, investments and more. That's what I'm aiming for. LP related etc.
“We started as a software company, but now we have plans to evolve into a financial company,” QuotaLab CEO and co-founder Andy Choi told TechCrunch. “With 40% market share on the startup side, 80% market share on the VC side, and the only player on the LP side, we are basically the financial infrastructure that supports the Korean venture ecosystem. We are considering it.”
QuotaLab was founded by former venture capitalists Choi, Dan Hon, and Pilseon Jun. Knowing the problems that GPs had to deal with, they saw an opportunity for a vertical SaaS solution in this space. The idea is to streamline outdated tools and spreadsheets into a platform that investors can use. Can be used to manage portfolio companies and share data with limited partners.
Choi said the company's decision to acquire Logos System for $23 million (30 billion won) last year was to enable QuotaLab to cover the entire Korean venture market. “Before the acquisition, our services only dealt with startups and investors (GPs). Now, we can connect the entire ecosystem from startups to investors to LPs. “This is my first time,” he said. The acquisition comes a little more than a year after QuotaLab raised $11 million in funding.
“For general physicians, [LogosSystem] The platform provides features for fund management, including LP management such as LP information, contacts, commitments, capital calls, distributions, and reporting. We also provide investment management, including investments, returns, asset changes, discounts, valuations, and accounting. e-approval and risk management,” he added Choi.
LogosSystem also allows LPs to manage their funds of funds and related assets (data on the funds they have invested in). Choi pointed out that his eFront from BlackRock is similar in terms of the features offered.
According to Choi, there are many aspects of the stock management market that need to be addressed. “One is the outstanding securities side, which typically deals with already issued equity, such as stocks, bonds, convertibles, etc.,” he said. “In this space, solutions like common Excel or enterprise resource planning work if you just want to manage back-office data. Early solutions looked like this,” he said. Masu.
But equity management platforms require a deeper understanding of the relationships between startups and their investors, and those relationships vary by market due to different VC dynamics, culture, fund LP structures, etc.
“For example, an equity management platform that only covers the needs of startups and not those of investors cannot be sold in a market where investors are also the key decision makers.The other is equity compensation. We deal with options, RSUs (restricted stock units), etc. This is more local because it's closer to human resources, and there are different laws governing the plan. [type of rewards possible, taxes, appraisals, etc]”
In short, a greater focus on stakeholder relationships, specialized services for thorough securities data management, and a variety of equity compensation markets are all new and different business opportunities the company is looking to tap into. Yes, he added. Choi said the plan has not yet been finalized, but it could be a securities company or a transfer agent, and the startup plans to register with South Korea's financial authorities soon.
Post-merger plan
According to Choi, QuotaLab has already begun integrating Logos System's investor fund management services within QuotaBook.
“For functionality primarily for interacting with LPs, previously [QuotaLab and LogosSystem]. We are integrating the affected QuotaBook functionality with LogosSystem. [the latter] It has much more sophisticated features,” Choi explained. “LogosSystem had very little functionality, primarily in terms of functionality for interacting with portfolio companies.Therefore, we have enhanced QuotaBook's relevant functionality to allow for easy synchronization of portfolio data to LogosSystem's platform. He’s integrating two products.”
According to Choi, both platforms will benefit each other's networks. “QuotaBook can leverage LogosSystem’s investor customer pool to increase upsell opportunities and cross-sell to portfolio companies.”
LogosSystem's CEO and founder left the company after the sale, but the next-in-command, who had been with LogosSystem for nearly 20 years, has been appointed as the new CEO to lead the team. Additionally, his 45 employees at LogosSystem remained with the team. Currently, QuotaLab has 75 staff members.
“Logos Systems' business is strong, so there will be no changes to its current structure,” Choi said.
In recent years, the cap table management space has become a bit crowded as startups proliferate around the world, especially in Asia. Choi told me that QuotaLab plans to expand into Southeast Asia in 2022. When I asked him recently, he wouldn't say which countries the company was considering, but if it's still targeting Southeast Asia, QuotaLab will be working with Singapore-based Qapita in that region. and Hong Kong-based token and stock management. Start Sprout. The company will also have to compete for market share as it expands internationally with big players in the space like Carta and AngelList, as well as new entrants like Pulley and Deel (thanks to its recent acquisition of Capbase). right.
The company may also choose to go the acquisition route to further its expansion plans. Quotarabo is open to making additional acquisitions, Choi said, adding that there is definitely potential to raise further funds to support these plans.
Last year was a tough year for startups, but it didn't have a big impact because most of QuotaLab's revenue came from mid-sized companies, large companies and investors, Choi said. Currently, QuotaLab has around 5,500 users on its platform, up from 3,500 in 2022.