“We onboarded to Capdesk in 2018, when we were in the middle of fundraising. At the time, we had share certificates and other key documents stored all over the place and needed a central source of truth.”
Chattermill’s investors fall into two categories, and Fraser’s found that using an equity management platform has been valuable to both.
“Our early-stage angel investors, who receive EIS/SEIS relief, tend to be very focused on having an up-to-date view of the cap table. They also want access to share certificates and reports, so they use Capdesk for that. Angel investors are often hard to get in touch with so putting all Chattermill’s information onto a platform that they can access in their own time saves us a lot of manual effort. It also showed the investors that we care about them and their capital and are tracking it sensibly.
“VCs are our other kind of investors. They were pleased to hear we’d migrated our equity management onto Capdesk, as it showed that we were staying organised and on top of reporting. While they don’t have as much hands-on interaction with Capdesk, it’s much easier for me to retrieve and share the information they request because of the platform.”
As Fraser used to work for a company that operated out of the US, he was familiar with US-focused equity management platforms already, and contacted one of them before coming across Capdesk.
“When I spoke to their team, it was clear that the platform wasn’t going to work for a UK-based company like Chattermill. Their focus was on meeting US requirements, which we just didn’t have.
“Luckily our CEO Mikhail had been recommended Capdesk. When we looked into it we found it was both far more cost-effective and better tailored to our needs than the alternative. The investors we work with, the structure of our business, the annual processes of managing equity and share capital; Capdesk caters to all of it.
“Our investors are based in France, Germany and the UK, and all have different reporting cycles. If a VC contacts me asking for the share capital as of 31st December, I can deliver that in a second. Previously, I would have had to pay hundreds of pounds per hour for a lawyer to do it. We’d have ended up racking up massive bills.”
It’s not just Capdesk’s report generation that saves Chattermill money on lawyers. As the company’s grown, it’s needed to seek guidance from and outsource risk to law firms, but found that Capdesk complements that neatly.
“We don’t need to rely on our lawyers as much. We get advice from them on things like setting up the option plan and funding rounds, but then move the ongoing management of those activities onto Capdesk.
“Setting up our option plan cost us a few thousand pounds. If I were to issue grants to employees through our lawyers instead of Capdesk, it easily could have cost us tens of thousands. Our investors expect the share capital part of the business to be administered perfectly, and because we trust Capdesk, so do they.”
Capdesk has minimised the time Chattermill spends discussing the status of share capital with investors, allowing them to focus on much more productive conversations.
“The whole senior team spends less time managing comms and queries with investors. It’s allowed us to focus on pivotal business discussions. It’s much more rewarding to review how we’re doing as a company, than pore over financial reports and explain how we’re protecting their investment.”
Chattermill’s now managed two funding rounds on Capdesk – the first at the end of 2018 and the second one a year later. While these use-cases are few and far between, they alone make the platform worthwhile. Fraser estimates that processing and the round and issuing the certificates on Capdesk saves the company £5,000-£10,000.
In between funding, he explains, Capdesk is primarily an employee benefit.
“In August we issued share options to 30 employees via the platform. The Capdesk team was unbelievably supportive to me while getting that done. James was always happy to jump on a call and help. It could have been a stressful experience but he made it easy.”
Back in March, the first wave of the coronavirus and sudden ‘work from home’ orders in the UK would have had serious implications for Chattermill’s employee share scheme, if it hadn’t been for Capdesk.
“Getting documents witnessed and signed by people normally is difficult; getting it done in a pandemic was a terrifying prospect. We’d have been couriering more than 30 sets of documents to people’s home addresses, having them witnessed and then couriered back. Managing that on Capdesk turned what could have been a month-long process into 48 hours.”
Scarlett spoke with Fraser Hopper, Head of Operations at Chattermill, in December of 2020