Investing Ideas

Made in Britain: Equity management firm, Capdesk

Christian Gabriel, founder of equity management company Capdesk, discusses the journey of his company and his secrets to success.

Tell us about your business?

I founded Capdesk in 2015. It’s my fourth venture as an entrepreneur. Before that, I ran a graphic design business, then launched a creative incubator, where we developed pitch videos to help companies raise funding. I also founded a consultancy to support companies with crowdfunding, where we set up campaigns and developed educational materials on the crowdfunding process.

Capdesk is headquartered in London with a second office in Denmark, but since the pandemic we’ve moved to a ‘work from anywhere’ model. We have Capdeskers in eight countries at the moment, and we’re planning to supercharge our customer acquisition throughout Europe in 2021.

My role involves setting the direction for the company, plus making sure everything’s running smoothly, everyone’s happy and that we always have funding to do what we want to do. I spend about 20% of my time on external matters and 80% on internal ones, which is totally different to the early days of the business. On a typical day, I could be holding an interview, having a one-to-one with one of Capdesk’s managers, fielding ad hoc questions, drafting a process for a new initiative and preparing for a board meeting.

Where did the idea for your business come from?

Capdesk was inspired by my experience of working at a crowdfunding platform in Denmark. The vast majority of companies keep track of their equity using messy spreadsheets. That’s not ideal for any business, but it’s total chaos when you have hundreds or even thousands of people with equity in the company!

Spreadsheets take a lot of time to maintain and come with a very high risk of human error. This is a problem if you need to check information about company ownership at short notice, where delays could put off a potential investor, or spotting and fixing errors can create a roadblock in the audit process.

Initially, I wanted Capdesk to help crowdfunded companies simplify equity management by digitising their cap tables and automating time-consuming processes. Now, we work with all kinds of private companies, with most of our customers being fast-growth startups and scale-ups.

I’m incredibly proud that Capdesk has managed to turn equity from a thorn in the side of the average finance team into its competitive advantage. With spreadsheets, the process of issuing employees equity can be so complex that founders feel it’s not worth the effort – even though equity is a powerful tool for motivating, rewarding and retaining individuals. Capdesk isn’t just digitising cap tables. We’re making it easy for leaders to unlock the power of equity by giving their staff some skin in the game.

What is your point of difference?

Capdesk is the best end-to-end solution for businesses in Europe to manage their equity.

Our truly unique feature is secondary transactions. Normally, when you issue share options to an employee, that person won’t be able to access the cash value of their equity until the business is sold or goes public. But life doesn’t always line up with your employer’s business plans. I believe optionholders should be able to use their equity to put down a house deposit, start their own companies, or take a career break, any time they want.

We created our secondaries marketplace in partnership with crowdfunding platform Seedrs, so companies can find buyers on the largest marketplace in Europe. We’re building an infrastructure that mimics the London Stock Exchange, but for shares in private companies.

How do you spread the word about your business?

Nothing beats a face-to-face meeting! The best way to get recommendations is to make a great impression and ask your new connection if there’s anyone else you should reach out to, or if they can make an introduction. Then focus on your customers: optimise your product for their happiness, deliver an incredible experience, and convert them into raving fans.

How has business been during the Covid-19 pandemic?

Better than expected! We’ve had a record year for new client numbers and far exceeded our revenue targets.

When the first lockdown came into effect, we quickly converted to remote-first operations and pivoted our strategy from ‘unicorn’ (aggressive spending in pursuit of rapid growth) to ‘camel’ (conservative, sustainable spending with a strategy focused on strength and resilience).

It was important for me to put our people before revenue – your reputation lasts much longer than a lockdown. We immediately delayed payments for any clients who were struggling and jumped on calls to help customers issue share options digitally. We learned that subsidising salaries with share options was a very effective way for founders to retain staff – so if there’s one silver lining to the pandemic, it’s that more business leaders are sharing the fruits of their success.

What’s the hardest thing about running a business?

The people. Working in the tech industry, you might not think that’s a big part of your role – but in reality, everything you do is about people. When you run a business, you make products for people, which are driven by people, and funded by people. You’ve got so many stakeholders, who are all unique individuals, and they often want very different things.

Because of this, you have to compromise – sometimes you have to disappoint an investor, and sometimes a customer can’t have what they want. It takes time to get used to handling people’s expectations, and what you can deliver in reality. Great CEOs care about people, and love to be around them – which means it can be really tough to make those compromises, maybe more so for the best leaders.

‘People’ decisions are the ones that keep me up at night, wondering if I could have done better. Also, it can be lonely as a CEO – you can’t always vent to your colleagues when people are being difficult!

Have you received any financial support for your business?

We’ve been very fortunate to raise investment from some major venture capital firms, which currently totals GBP10.8m.

In March, we raised a GBP5m Series A extension round led by Fidelity International Strategic Investments and MiddleGame Ventures. This will accelerate our international expansion and help us develop new, innovative product features.

Until now, we’ve prioritised building a platform for fast-growth startups, but with the new funds, we’re planning to build a full suite of equity management solutions for private companies of every shape and size.

What have been the biggest challenges you’ve faced?

I started Capdesk when I was 24, and it felt like I had to grow up in my own business – which is really hard. I also had to do it in a new field, and a new country. In the UK, I didn’t have any friends, classmates or family connections, I just had to figure out what to do with Capdesk by myself.

As a founder, you have to constantly keep improving yourself and the team to push the company to new heights. You make great friends at startups, but just because someone is a fantastic person, that doesn’t mean they’re going to stay with the company forever. Growing the business and maintaining a strong culture as different people come and go is an ongoing challenge.

What’s the best decision you’ve made so far?

Moving to the UK! It’s not just been the best business choice, but the best decision for my whole life. London attracts dreamers from all over the world: everyone is open to other cultures, and different ways of doing things. London’s people are the best in the world.

Any regrets?

I grew up on the job, so I probably view Capdesk a bit like people view their teenage years – a lot of cringeworthy moments, where you thought you were the king of the world, then look back and think you could have done so much better, had you known more at the time.

What is one thing that would make running your business a lot easier?

I’d love to achieve complete transparency. I don’t think there’s a need for managers, as much as a need for transparent communication between the board, CEO and everyone else on the team. I wish everyone could learn how to be outcome-driven – it’s very hard for more junior staff to understand the link between the tasks they do and the impact for the business. A company where executives, board members and employees are all aligned, and where everyone can relate their activities to target outcomes, is a CEO’s dream.

What’s next for your business?

Bringing the equity revolution to every country in Europe! International expansion is a huge focus for Capdesk right now. Every country in Europe has a unique legal framework for equity. The UK scores highly for share option-friendliness, but we love a challenge, so we’re launching Capdesk in Germany this year. It’s possibly the most complex place in Europe to run an employee equity scheme, but it has a thriving tech startup ecosystem.

Everyone should be able to benefit from the business wealth they’ve helped to create – it shouldn’t matter where you live. Educating business leaders on the true power of equity in growing companies is a key part of my role. I hope offering employee equity will soon become standard practice in all businesses – not just the Silicon Valley elite.

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Made in Britain: Equity management firm, Capdesk

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