Carta Competitor: New Cap Table Management Software for Founders

Since graduating from Stanford University in 2011, Yin Wu has been a co-founder of multiple ventures, including Double Labs, a computer vision firm acquired by Microsoft. She subsequently spent several years at Microsoft as a software engineer. It was following this acquisition that she gained a thorough understanding of the complexities surrounding a company’s capitalization table, or “cap table,” as she describes it.

Wu’s latest endeavor, Pulley, is a Mountain View, California-based company established 14 months ago, specializing in cap table management software. The company aims to address the challenges she identified and has secured $10 million in funding, led by the payments provider Stripe, with additional investment from Caffeinated Capital, General Catalyst, 8VC, and a number of individual investors.

Wu faces significant competition in the market. Carta was reportedly seeking $200 million in funding at a $3 billion valuation as of spring (though this round was never formally confirmed or announced), having previously raised $300 million the prior year. Morgan Stanley has also been expanding its stock plan administration services through acquisitions, including Solium Capital and Barclay’s stock plan business.

Startups frequently succeed in challenging established companies, and Pulley may benefit from distractions faced by Carta, such as a highly publicized gender discrimination lawsuit brought by a former Vice President of Marketing. We contacted Wu to explore this possibility. While she didn’t directly address the lawsuit, she emphasized the importance of “values” and elaborated on the distinctions between Pulley’s and Carta’s products.

TC: What motivated the creation of this company? Has recent publicity surrounding Carta created an opportunity for a new competitor in this field?

YW: I departed from Microsoft in 2018 and launched Pulley a year later. We bypassed the seed funding stage and proceeded directly to Series A due to substantial investor interest. Many investors were seeking a superior product for their portfolio companies, and an increasing number of founders prioritize aligning with companies that share their values, such as Pulley.

TC: How many individuals comprise the Pulley team, and have any team members been recruited from Carta?

YW: Our team consists of seven members, including four who are former founders of Y Combinator companies. We attract founders to our team because of their direct experience with the difficulties of cap table management and their desire to develop a more effective solution for other founders. Currently, we have not hired anyone from Carta.

TC: Given Carta’s substantial funding and extensive reach, what advantages does Pulley offer to startups that Carta cannot provide?

YW: We deliver a superior product experience to our customers. We streamline every interaction within Pulley, making it both easier and faster. For example, 409A valuations are completed in five days instead of weeks, and onboarding takes the same day rather than months. This is comparable to the difference between Stripe and Braintree upon Stripe’s initial launch, where a better product captured a significant market share.

A key feature of Pulley is our modeling tool [which enables founders to forecast dilution in future funding rounds and helps employees understand the value of their equity as the company evolves]. Founders are switching to Pulley from competitors specifically to utilize this modeling tool [and it effectively handles] pre-money SAFEs, post-money SAFEs, pro-rata rights, and discounts. To our knowledge, Pulley’s modeling tool is the most comprehensive available.

TC: How do your pricing structures compare to those of Carta?

YW:  Pulley is available at no cost to early-stage companies, regardless of their funding levels. Our paid plans are competitively priced with Carta. We founded Pulley in response to frustrations with existing cap table management tools. With other services, we frequently had to consult with our accountants or legal counsel for edits, reports, or data retrieval, incurring substantial legal fees each time.

There is a readily apparent hidden cost of around $2,000 when using tools that are not self-service for establishing and maintaining your cap table.

TC: Is there a potential for business-to-business partnerships, such as offering a white-labeled service to attorneys, accountants, or wealth managers? Or are these professionals considered competitors?

YW: We believe there are opportunities to offer a white-labeled service for accountants and law firms. However, this is not our current priority.

TC: How robust is the software? Can it handle complex or unusual cap table scenarios?

YW: We launched Pulley one year ago and are releasing it today because we have invested in an architecture designed to support complex cap table scenarios as companies grow. Two critical aspects of cap table systems are ensuring data preservation and maintaining numerical accuracy. We have not experienced any data loss for our customers and have implemented a thorough testing system to verify the accuracy of cap table calculations within Pulley.

TC: At what stage of development is it most beneficial for a startup to utilize Pulley, and what measures are in place to retain customers and prevent them from switching to a competitor later on?

YW: We work with companies beyond the Series A stage, such as Fast and Clubhouse. Companies are unlikely to change cap table providers if Pulley provides the tools they need to scale. We already offer features comparable to those of our competitors, including electronic share issuance, ACH transfers for stock options, and modeling tools for multiple funding rounds. We believe we can attract more startups by offering a product that is both easier to use and faster to implement.

TC: Concerning your paid plans, what are Pulley’s fees and what services are included? How many service tiers are available?

YW; Pulley is free for early-stage startups with fewer than 25 stakeholders. For companies exceeding that number, we charge $10 per stakeholder per month. A stakeholder encompasses any employee or investor listed on the cap table. Most companies upgrade to our premium plan after a seed round when they require a 409A valuation.

Companies generally prefer not to rely on free products for cap table management. Pulley places a high priority on the privacy and security of our customers’ data. We charge a flat fee to assure our customers that their data will never be sold or used without their explicit consent.

TC: What is Pulley’s relationship with venture capital firms?

YW: Our primary focus is on founders, rather than investors. We collaborate with accelerators like Y Combinator to assist their portfolio companies with cap table management, but we do not have any formal partnerships with venture capital firms.