A new study by fintech company Quadre show that British fintech companies belive their business is being slowed down by equity management. A third of the respondents claim that they have delayed projects due to equity management tasks.
Takeouts from the report:
Beyond the pain and operational headache for founders, equity management presents a serious challenge at a company level
and is a critical factor holding businesses back. Until now, equity management was viewed as painful but for the first time, this
research reveals a direct link between cap table challenges and wider company success.
More than two thirds (67%) of the founders asked believed that time spent on equity management was a distraction from
growing their core business.
Although the ongoing administration around investment and equity management may seem like a relatively small responsibility,
61% of founders believe the time spent on closing investment rounds has impaired their ability to scale the business, run the
company, or deliver a product.
What is more, time spent and lost operational costs through equity management has significantly affected investment, growth,
and progress against key milestones. When asked about the specific impacts:
- More than a third (35%) of founders had delayed projects within the organisation due to the time and costs of equity management
- 31% of founders said this problem had inhibited business growth
- Almost one in five had lost out on vital funding (19%)
It’s clear. Challenges around equity and cap table management are not only causing pain but impeding company success.
The true impact is likely far worse, stopping many companies from obtaining any funding and therefore writing them off
before they’ve begun.
Despite these consequences, 63% of all respondents who said they used technology to automate the
fundraising process, invested just £1.000 or less on tools which would support cap table management.
Read the whole report on Quadre’s website.