Managing startup equity can be overwhelming for busy startup founders. There is a lot of moving parts involved in managing equity, which can easily get overwhelming, especially with increased growth, new capital raises, and an expanding team of global employees.

An equity management software automates a lot of these processes, and finding the right tool for your business will ultimately save you time and resources and allow you to focus on growing your business.

In this guide, we will unpack the essential things you need to know when looking for an equity management software, including 17 equity management tools in the market today.

Equity management software is a tool designed to help companies manage their equity-related tasks. It's a tool that automates equity plan administration, cap table management, compliance reporting, electronic securities transactions, tax and accounting integration, and more.

Essentially, it's a centralized platform that provides real-time data and insights into equity-related activities, making it easier for companies to manage their equity.

Typically, an equity management software comes with a cap table or ESOP (Employee Stock Ownership Plan) components.

Some softwares are focused on cap table management only, others on equity management. And then there are softwares that allow you to conveniently manage your cap table, issue equity grants, conduct valuations, model scenarios, and manage employee stock pool all at the same time.

It's important to know your requirements both in the short term and the long term so you can choose the right software for your business.

Equity management, like cap table management, often begins with spreadsheets. There comes a point where version control becomes a nightmare and computations become too complex to be managed manually.

Spreadsheets are messy. Their functionality is limited to formulas. It's often impossible to tell when they were last updated — and by whom. And while cloud-based tools like Google Sheets have helped ease this pain point, there is still the extra challenge of manually ensuring that the spreadsheet is up to date.

And the spreadsheet part is only a fraction of the real work. You have legal contracts, and employee offers letters, team culture aspects, tax and compliance reporting. There are better uses of your time as a startup founder, and you want these manual processes automated and stored in a single reliable tool.

Equity management tools are used by all kinds of businesses— public and private companies from startups to enterprises. That's because creating and managing a cap table and equity programs (like employee stock options) is complex and time-consuming, with both financial and legal ramifications.

Having the right software streamlines a complex job—plus, it ensures that your equity and cap table are always legally compliant.

Just like most admin tasks, equity management becomes more tedious as your team grows. With so many components to keep an eye on, it's simply impossible for a busy startup founder to be on top of things. If you believe that equity matters in all stages of growth, you will absolutely benefit from having an equity management software. Let's count all the ways it benefits you:

One of the most significant benefits of using an equity management software is increased efficiency and accuracy. With manual equity management, there is a higher chance of errors, which can result in compliance issues and legal disputes.

An equity management software can automate many equity-related tasks, such as equity plan administration, cap table management, and compliance reporting, reducing the risk of errors and saving time.

Transparency and compliance are essential aspects of equity management. An equity management software provides transparency into equity-related activities, making it easier for stakeholders to understand and track their equity. It also ensures compliance with regulatory requirements, such as SEC regulations and tax laws.

An equity management software provides real-time data and insights into equity-related activities. This data can help companies make informed decisions about equity grants, options, and other forms of equity-based compensation. It also provides insights into the company's ownership structure, allowing companies to identify potential issues and opportunities.

Equity management involves communication and collaboration between various stakeholders, such as employees, investors, and legal counsel. An equity management software provides a centralized platform for communication and collaboration, making it easier for stakeholders to work together and share information.

Using an equity management software can be cost-effective in the long run. It reduces the need for manual labor and minimizes the risk of errors, saving time and money. It also reduces the risk of compliance issues and legal disputes, which can be costly for companies.

We like to think of this question another way: When do you need to raise capital? When do you need to more investors and advisors to your cap table? When do you need an employee stock option plan?

The timing is different for every company. We've seen some startups ditch the spreadsheet and migrate their cap tables into Cake in very early stages, before a fund raising round, or before hiring its first set of employees.

As soon as you decide to hire an employee in a foreign country and you need to comply to laws and taxation, or as early as seed A+ funding where investors have to be added into your capitalization table.

We believe there are a few key features you need to look for in your equity management software. These are:

It should be quick and easy to build your cap table and get started. Stakeholders should be able to easily navigate a dashboard that gives them all the crucial information they need about their equity, options, vesting schedules, and more. Steps should be streamlined and automated. Legal agreements should be simple and built-in. Expert support should be on hand.

In today's digital world — especially post-pandemic — work is more globalized than it's ever been. A lot of ESOP management tools are focused on specific countries or regions, which can be limiting for companies with remote workers or those that want to open up their hiring pool to talent from around the world.

Unfortunately, you can't pay for your ESOP management tools with stock options. Many companies that need this kind of technology are small and cash-strapped while they direct resources toward growth. Having the right software shouldn't interfere with that — it needs to be affordable.

An equity management software should automate the administration of equity plans, such as stock option plans (ISO, NSO) and/or advisory shares. It should also be able to handle the administration of various types of equity plans, from startup to IPO and beyond.

An equity management software should ideally provide cap table management capabilities, allowing companies to manage their equity ownership structure. It should also be able to handle complex cap tables, such as those with multiple rounds of financing and various equity classes.

An equity management software should provide compliance reporting capabilities, allowing companies to comply with regulatory requirements. It should also be able to generate reports on equity grants, exercise activity, and other equity-related activities.

An equity management software should integrate with tax and accounting software, allowing companies to manage the tax implications of equity compensation. It should also be able to generate tax reports and handle tax withholding.

An equity management software should help simplify capital raises, legal workflows integrated within platform, and investor communication and transparency.

ESOP management software is a type of software that helps companies manage their employee stock ownership plans (ESOPs). It provides features such as equity administration, vesting schedules, tax compliance, and reporting.

ESOP management software is suitable for public and private companies of all sizes and industries.

The benefits of using ESOP management software include streamlining the process, reducing errors, saving time, and ensuring legal compliance.

The cost of ESOP management software varies depending on the software vendor, the features offered, and the number of users. Some software vendors charge a monthly subscription fee, while others charge a one-time fee.

The best ESOP management software depends on your company's specific needs and requirements. The software solutions mentioned in this article are among the top-rated in the market.