Singapore-based Qapita announced on Tuesday that it has raised USD 5 million in a pre-Series A round led by MassMutual Ventures. The company provides software that helps manage equity and employee stock ownership plans (ESOP) in private capital markets, a fast-growing business across the region. It gains revenue from monthly subscription fees from its clients.
“We want to enable founders to not only offer equity to more stakeholders, including employees, but also provide faster liquidity,” said CEO and co-founder Ravi Ravulaparthi. “This will enable them to accelerate the flywheel of reinvestment into the rapidly growing startup ecosystem in India and Southeast Asia.”
In a previous interview with KrASIA, Ravulaparthi said that most companies still employ ineffective ways to manage their capital spreadsheets. The data, including share and equity owners, are not recorded in real time. “If your ownership is not managed effectively or if there are missing documents, this will lead to delays and inefficiency at the time of transaction. It will impact your fundraising and how you manage your future equity raises,” he said.
Ravulaparthi thinks that most founders and employees in startups still struggle to understand the concept of ESOPs and their implementation. A recent joint survey by VC firm Monk’s Hill Ventures and recruitment platform Glints found that in Southeast Asia, equity is a common form of compensation for C-level staff and other executive-level hires, but not for junior or mid-range employees. The survey stated that fewer than 32% of participants were being compensated in equity. Preference for cash payments is the main reason for the low proportion, according to the report.
This is where Qapita sees opportunity. The company is yet to see major competitors, Ravulaparthi said. ESOP consultation services are usually provided by independent consultant firms.
Lakshman Gupta, COO and co-founder of Qapita, said that in the last six months, more than 100 startups have agreed to use the service. “We are looking to partner with various service providers including law, accounting, and company secretarial firms,” he said.
The round also saw participation from India-based venture capital firm Endiya Partners alongside angel investors such as Avaana Capital founder Anjali Bansal and the co-founder of Indian B2B marketplace Udaan, Sujeet Kumar. Last September, Qapita netted an undisclosed amount of funding in a seed round led by Vulcan Capital and East Ventures.
Qapita has built its team to include senior talent from industries like investment banking, venture capital, and ESOP management. The team has grown from six people in September 2020 to over 30 people today, spread across India and Southeast Asia.