Call a neo-Korean startup QuotaLab is in a bid to follow in the footsteps of Carta, the table management company used by a number of startups and investors in the US
Carta began life as “eShares” in 2012 as a capital board management service that startups could use to issue shares to their investors and employees. Today, its stable of offerings has expanded to include everything from equity valuation and management, to bookkeeping, risk assessment and brokerage services. It also had a secondary stock market that investors could use to trade shares in startups, but it shut down that service earlier this year after a bit of controversy.
An AY Combinator alum, QuotaLab also started as a stock management service (called QuotaBook) for startups and investors in South Korea. Now, with the integration of investor-facing fund management service LogosSystem after the merger nears completion, it aims to become a one-stop shop that the Korean startup and investor community can use to manage their funds, equity , investments and LP. relationships and more.
“Although we started as a software company, we now plan to grow into a financial company,” QuotaLab CEO and co-founder Andy Choi told TechCrunch. “With our 40% market share on the startup side, 80% market share on the VC side, and being the only player on the LP side, we are basically the financial infrastructure that powers the Korean business ecosystem. We are looking at which financial businesses we can pursue.”
QuotaLab was founded by three former venture capitalists — Choi, Dan Hong and Pilseon Jun. Familiar with the problems facing GPs, they saw an opportunity for a vertical SaaS solution in the space: Streamlining legacy tools and spreadsheets into a platform that investors could use to manage their portfolio companies and share data with limited partners.
Choi said the company’s decision to acquire LogosSystem last year for $23 million (KRW 30 billion) was intended to help QuotaLab cover the entire venture market in South Korea: “Before the acquisition, our service only dealt with with startups and investors (GPs). Now we can connect the entire startup-to-investor-to-LP ecosystem, which is a first in South Korean venture history,” he said. The acquisition comes just over a year after QuotaLab raised an $11 million round.
“For general practitioners, the [LogosSystem] The platform provides functions to manage their funds, including LP management, such as LP information, contact points, commitments, fund calls, distributions, reports, etc. electronic approvals and risk management,” Choi added.
LogosSystem also allows LPs to manage their funds and their related assets (data about funds in which they have invested). Choi noted it BlackRock’s eFront they are similar in terms of the functions offered.
According to Choi, the equity management market has many sides that you can deal with. “One is the issued securities side, which usually deals with already issued shares such as stocks, bonds, convertibles, etc.,” he said. “In this area, if it’s just back-office data management, then a generic solution like Excel or enterprise resource planning can work. Early solutions were once like this,” Choi said.
However, equity management platforms need a deeper understanding of the relationship between startups and their investors, and these relationships vary by market due to different VC dynamics, culture, LP fund structures, etc.
“For example, an equity management platform that only caters to startup needs but does not cater to investor needs cannot be sold in a market where investors are also key decision makers. On the other side are equity awards. This usually involves stock options, RSU (Limited Stock Unit) etc. This is much more local as it is closer to HR and there are many different laws governing it [type of rewards possible, taxes, appraisals, etc.].”
In short, a greater emphasis on stakeholder relations, specialized services for in-depth securities data management and different share award markets are all new and different business opportunities the company hopes to address, he added. Choi said the plan has yet to be finalized, but it could be a brokerage firm or a transfer agent, and the startup plans to register with Korean financial authorities soon.
Post-Merger Plans
QuotaLab has already begun integrating LogosSystem’s investment fund management service into QuotaBook, Choi said.
“For functions, mainly for interaction with LPs, there were previously overlaps between them [QuotaLab and LogosSystem]. Since then, we have been integrating the affected features of QuotaBook with LogosSystem [the latter] it has much more sophisticated functions,” Choi explained. “For features that are mostly about interacting with portfolio companies, LogosSystem had almost none of that. So we’re enhancing related functionality in QuotaBook and integrating the two products so portfolio data can be easily synced to the LogosSystem platform.”
Both platforms will benefit each other’s network, according to Choi. “QuotaBook can use LogosSystem’s pool of investor customers for more selling out opportunities and cross selling to their portfolio companies”.
LogosSystem’s CEO and founder left the company after the sale, but the next in line, who has been with LogosSystem for about 20 years, has been named the new CEO to lead the team. In addition, LogosSystem’s 45 employees remained with the team. Now QuotaLab has 75 people as of today.
“There will be no changes to LogosSystem’s current structure as its operations have been stable,” Choi noted.
The cap board management space has gotten a bit crowded in recent years as startups have proliferated around the world, especially in Asia. Choi told me in 2022 that QuotaLab planned to expand to Southeast Asia. He didn’t specify which countries the company was looking at when I asked him recently, but if it still has its sights set on Southeast Asia, QuotaLab is likely to find itself competing in that region with Singapore-based Qapita and Hong-based token and equity management Kong starter Sprout. It will also have to fight for market share as it expands internationally with the biggest players in the space like Carta and AngelList, as well as newcomers like Pulley and Deel (thanks to its recent acquisition of Capbase).
The company may even go the acquisition route to continue its expansion plans. QuotaLab is open to making additional acquisitions, Choi said, adding that there is certainly room to raise more funding to support those plans.
Last year was tough for startups, but that didn’t particularly affect QuotaLab because most of its revenue came from mid-sized businesses, enterprises and investors, according to Choi. Today, QuotaLab has around 5,500 users on its platform, up from 3,500 in 2022.
