QuotaLab, a South Korean startup, is looking to replicate Carta, an American cap table management service used by numerous startups and investors across the U.S.
Carta first made its debut as “eShares” in 2012 as a cap table management service that startups could use to issue equity to investors and employees. Since then, its services have expanded greatly to offer valuation and equity management, bookkeeping, risk assessment and brokerage. Furthermore, there was previously an online secondary share marketplace called Eshares where investors could trade shares of startups but this service was discontinued earlier this year amid some controversy.
QuotaLab, an alumni of Y Combinator, began life as an equity management service called QuotaBook for South Korean startups and investors. Now that its post-merger integration of investor-facing fund management service LogosSystem is near completion, QuotaLab plans on becoming a one-stop shop that Korean startup and investor communities can utilize for managing funds, equity investments, LP relations and more.
“Though we started as a software company, QuotaLab’s CEO and co-founder Andy Choi told TechCrunch that they now plan to transition into financial services.” With 40% market share on startup side and 80% on VC side – both of which include being sole LP player – QuotaLab provides financial infrastructure powering Korean venture ecosystem. They’re exploring what financial businesses they can pursue.
QuotaLab was established by three former venture capitalists — Choi, Dan Hong and Pilseon Jun – familiar with the difficulties that GPs must navigate. Recognizing a niche opportunity within this sector for vertical SaaS solutions such as QuotaLab to streamline old tools and spreadsheets into an effective platform where investors could manage portfolio companies while sharing data with limited partners.
Choi explained that QuotaLab’s decision to acquire LogosSystem last year for $23 million (KRW 30 billion) was meant to broaden their coverage of South Korean venture market: before, their service only dealt with startups and investors (GPs); now we connect all three elements – startups, investors (GPs), LPs – within South Korean venture history for the first time ever,” Choi noted. QuotaLab had raised an $11 million round shortly prior to this acquisition.
LogosSystem’s platform provides general partners (GPs) with functionalities necessary for effectively running their funds, including LP management such as information gathering and commitment tracking; capital call reporting; distribution reporting; reporting; etc. Additionally, investment management functions include investments, returns, asset changes, markdowns valuations accounting e-approvals risk management,” Choi explained.
LogosSystem also helps LPs manage their fund of funds and related assets (data on funds they’ve invested in). Choi noted that BlackRock’s eFront provides similar functionalities.
Choi noted that equity management involves multiple sides. “One is issued securities management, which includes stocks, bonds and convertibles already issued into circulation,” he explained. If just back-office data management is needed then a general Excel or enterprise resource planning-like solution may work; earlier solutions used this approach.
Equity management platforms need a deeper understanding of the relationships between startups and investors, which vary depending on market-specific VC dynamics, culture and fund LP structures.
“For instance, an equity management platform that only addresses startup needs but not investor requirements cannot be sold into markets where investors are key decision-makers. Equity awards – like stock options or RSU (Restricted Stock Unit), tend to be much closer to HR departments where there may be numerous laws regarding rewards such as taxes or appraisals — offer much greater localized solutions.”
Choi detailed that his company plans to focus on stakeholder relations, in-depth securities data management services and various equity award markets as new business opportunities they hope to explore. He did not specify their plan for doing this yet but noted it could include being a stock brokerage company or transfer agent and that soon afterwards they hope to register with Korean financial authorities.
Choi disclosed that QuotaLab has already begun to integrate LogosSystem’s investor fund management service within QuotaBook, post-merger plans are underway and in full swing.
“Previously there were overlaps between QuotaLab and LogosSystem regarding functionalities to interact with limited partners (LPs), such as for portfolio company interactions; we are unifying those affected functions from QuotaBook with those from LogosSystem since [the latter] offers more sophisticated functions,” explained Choi. Furthermore, LogosSystem barely had any relevant functionality for portfolio company interactions compared with QuotaBook; therefore we are improving these functionalities in QuotaBook and integrating both products so portfolio data can easily sync between platforms.”
Choi believes both platforms will add to one another’s networks, with QuoteBook using LogosSystem’s investor customer pool for upselling opportunities or cross-selling to their portfolio companies.
LogosSystem’s founder and CEO left after its sale, but their second in rank who had been with LogosSystem for around 20 years was appointed the new CEO to lead their team. Furthermore, all 45 employees remained part of QuotaLab, now consisting of 75 staff.
Choi stated, “There will be no changes to LogosSystem’s current structure, as its business has been robust.”
Cap table management startups have proliferated globally over recent years, particularly in Asia. Choi told me back in 2022 that QuotaLab planned to expand into Southeast Asia; when asked recently which countries it might target, he didn’t provide specifics, however if QuotaLab still plans to target Southeast Asia they will likely come into competition with Qapita from Singapore and Hong Kong-based token and equity management startup Sprout respectively; larger competitors Carta and AngelList may vie for market share while newcomers such as Pulley or Deel (through Deel’s acquisition of Capbase).
QuotaLab may pursue its expansion plans through acquisition. Choi noted that QuotaLab is open to making additional acquisitions and that there may be opportunities to secure additional funding for its plans.
QuotaLab fared relatively well despite the difficult year for startups in 2018, as most of its revenue comes from mid-sized businesses, enterprise companies and investors, according to Choi. Today there are around 5,500 users on its platform, up from 3,500 last year.