Profile Pensions provides impartial and jargon-free pension advice to those planning for the future. Originally working with a spreadsheet-based cap table, the company made the switch to Capdesk in 2018. In the onboarding process, Capdesk helped Profile Pensions uncover inconsistencies between its cap table and its HMRC submissions that could have had damaging implications.
We caught up with Profile Pensions’ Chief Financial Officer, Adam Wearing, to talk about how Capdesk brought welcome transparency to the company cap table, helped it avoid an expensive mix-up with HMRC and prepared the team to roll out a new employee share scheme.
When Adam joined Profile Pensions four years ago, the company’s entire cap table was managed via spreadsheets. As a new hire, this presented Adam with one major problem: there was no way of combing back through the table’s history to verify all the information.
He could either take the data at face value and run the risk of finding an expensive error further down the line, or look for a new way to manage the cap table and validate its contents. Not willing to take a chance with the business’ finances, Adam went to a prominent investor for advice.
“I just wasn’t very confident in the spreadsheet,” he explained. “I asked our lead investor if he had any suggestions and he had no hesitation in recommending Capdesk.”
As it turned out, Adam’s initial distrust of the company’s spreadsheet-based cap table was well-founded. “Capdesk helped me understand the history of the cap table and quickly flush out inconsistencies,” he said. In this case, the inconsistencies stemmed from a substantial mistake in the cap table data.
“A previous finance manager had got their HRMC filings wrong and attributed members of our executive team options worth somewhere around the £25 million mark. It was only by uploading our cap table to Capdesk, during which the onboarding analysts noticed we were exceeding scheme limitations, that we were able to spot the mistake and work out what had happened.”
By alerting Adam to a mistake and providing him with the tools to unpick what had happened, Capdesk gave Profile Pensions the opportunity to correspond with HMRC and find a solution before any damage was done.
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While switching away from spreadsheet-based cap management was one of the main reasons for adopting Capdesk, it wasn’t the only factor. Quick implementation was also driven by the company’s desire to launch an employee share scheme.
“Before we launched our employee equity scheme, we had a shareholder base made up of angel and founder investors, venture capital firms and senior management. That totalled about eight people. Suddenly, we had another 80 stakeholders to add.”
As well as allowing for easy expansion, management and maintenance of their cap table, Capdesk simplified the process of issuing options. “Before Capdesk, we were using stamped paper documents. The platform allowed us to do staff issuances digitally. Now, all employees are on the platform. They sign their documents and have them witnessed on Capdesk, which has made the process super slick. It would have been a major effort and headache without it.”
Employee options schemes have an important role to play in building, motivating and rewarding their team. For Profile Pensions, launching a scheme served two purposes.
“We felt that our employees, a small but dedicated group, were working hard to take the business through the next stage of its journey. At this point, some people had accumulated almost a decade of service, so it was a way of rewarding them.”
The scheme was also a means of attracting top talent to the business. “London is a very competitive market and we don’t have a particularly big brand, so you really have to sell the business to prospective hires. Of course, you can sell it on what it’s like to work for the company. But you can also sell it by offering a slice of equity that pays out further down the line.”
Profile Pensions is a clear-cut example of how Capdesk benefits ambitious startups. As well as cleaning up its cap table and resolving concerning financial complications, Capdesk was key to the quick, problem-free launch of its share scheme. This has helped Profile Pensions to harness the power of employee equity and to reward, incentivise and attract the talent it needs to continue its journey.
