Share enters asset management space with acquisition of Capbase • businesskinda.com

by Janice Allen
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Remote payroll startup Share has acquired fintech Capbase for an undisclosed amount in a cash and stock deal, the companies have told businesskinda.com exclusively.

As the name suggests, San Francisco-based Capbase claims it can update a company’s cap table in real time as it issues stock, signs contracts, and raises money from investors. It then uses that data to build API integrations that can be used to set up bank accounts, payroll, and business insurance. Greg Miaskiewicz and Stefan Nagey founded the company in 2018 and raised a total of approximately $6 million in venture capital from companies such as Better Tomorrow Ventures, Clocktower Technology Ventures, Great Oaks Venture Capital, Village Global and a number of angel investors.

“We tried to make it easier to start a business, raise money and spend equity”, CEO Miaskiewicz businesskinda.com said in an interview. Capbase ran a private beta until April 2021 and saw its customer base grow “from 10 to more than 500 in less than 18 months,” he said, though he declined to disclose hard revenue numbers.

Alex Bouaziz and Shuo Wang started remote in 2019, Share in San Francisco with the mission to allow companies to hire workers and contractors in other countries “in less than five minutes”. Share also says it gives companies the ability to pay teams in more than 150 currencies with “just one click”. Company grossed nearly $680 million in total funding, was last valued at $12 billion and boasted that it had crossed the $100 million threshold in ARR (annual recurring revenue) by March 2022. (The company declines to disclose current numbers, saying only that its ARR month over month is “at a very strong clip.”)

Over the years, Deel has further developed his model and added more functions acquire other start-ups to boost its offerings, including equity-related services to clients in an advisory capacity. For example, it advises them on how to manage their taxable events on the equity of Employer of Record employees and contractors, in addition to handling payroll for those events. With the acquisition of Capbase, Deel wants to link those services a new product for the management and issuance of shares.

In an interview, Bouaziz said that Deel’s customers do wrestled with “where and how to start approaching equity grants,” with questions such as how employees and contractors can allocate equity in countries where they don’t have entities and what they must do to comply with local laws.

Interestingly, Capbase was one of Deel’s first clients, and Bouaziz says he was always “appreciative” of it from Miaskiewicz think about compliance.

So, as customer questions continued, such as how to allocate equity to people in other countries, especially in light of differing labor laws everywhere, Deel set out to find a solution. In fact, it was a problem it had to solve on its own, especially given that the company offers people “the same equity no matter where they are”.

“We looked at US compliance and realized it was very, very hard to do,” Bouaziz told businesskinda.com. “Equity is such an important part of businesses, so it felt like something we had to address to enable other companies to grant this across geographies and at scale.”

Instead of “just doing it from scratch”, Deel chose to work with Capbase.

Simply put, Deel hopes with the acquisition of Capbase to alleviate the complexity associated with building and growing businesses. It was attracted by the fact that Capbase works to help companies with incorporation and fundraising in their early days, as well as with compliance filings and equity allocations as they mature, Bouaziz said.

“They provide technology and compliance expertise to help hundreds of companies seamlessly integrate across the US, set up bank accounts and boards, manage cap tables and, of course, allocate equity,” he added. “All of these things complement our efforts to help businesses expand more easily, all in one place, compliant.”

Image Credits: Cap base

Notably, Deel believes the addition of Capbase will help it “do more in the US to support startups and help companies go global.” This will undoubtedly allow Deel to better compete with others in the space.

For example, the Workforce Management platform unveiled Rippling last October a new global payroll product those are CEO Parker Conrad was not shy about admitting that he would compete directly with Deel. At the time, Conrad told businesskinda.com that the new offering would give Rippling’s U.S.-based customers a way to pay employees around the world — whether full-time or contract — more “seamlessly.”

However, one company that Deel does not try to compete with is Carta.

“Capbase’s original product is similar to Carta and Stripe Atlas,” said Bouaziz. “We are not doubling down on that product. I think cap table management is important, but many companies have built a product around it and reinventing the wheel is not something we like to do. Entering this market would be like reinventing the wheel.”

“We really want to building a product that solves global equity for the employer of a record model for employees around the world,” he added. “We want to use that in-house knowledge built in the US and produce it globally.”

For Capbase, the offer to be acquired in an extremely challenging macro environment was more attractive than “continuing on the fundraising path in a rocky economic climate”, admits Miaskiewicz.

The startup’s 20 employees all join Deel.

Miaskiewicz believes that if the two companies join forces, Deel will become an even stronger company.

‘If you try to sell services to startups or companies that are going to be the next big tech companies you want to build that relationship and offer them services as early as possible in the lifecycle because then you can build and offer more and more services as they scale so that you monetize that relationship and build lifetime customer value,” he told businesskinda.com.

Meanwhile, Deel expects to have a “fairly solid working product” available to customers — including companies like Nike, Cloudflare, Shopify and Subway — in early to mid-February.

“Obviously with global compliance we will refine over time as the product becomes more and more complicated and more and more aligned with local jurisdictions and local laws,” said Bouaziz.

Equity management is clearly a hot item. On Jan. 10, investment giant Fidelity announced it had acquired Shoobx, a venture-backed fintech startup, for an undisclosed sum. Shoobx is a provider of automated wealth management operations and financing software for private companies “at all stages of growth,” up to and including an IPO. Services it offers include helping companies send out offer letters, awarding equity to new employees, managing their cap tables, and getting a 409A valuation report.

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