How fintech startup Codat uses Carta to keep employee equity in check

Rebecca McKenzie – Codat
Rebecca McKenzie
Head of Legal




Funding stage

Series C (raised in June 2022)

Carta products/services used

Cap table, share plans, company valuations

Since launching in the UK in 2017 and scaling up to Series C, Codat has become a truly international business. Today, its team of 150 employees across London, New York and Australia serve a global clientele of banking giants and fledgling fintechs.

As a business data API provider, automation and efficiency are Codat’s bread and butter. It’s no surprise that the startup values similar qualities in the software it uses to manage internal operations. So, when the leadership team started looking for a cap table solution that could handle different share schemes in multiple jurisdictions, there was only one provider that fit the bill.

We spoke to Codat’s Head of Legal, Rebecca McKenzie, about how she uses Carta to streamline equity admin and keep company valuations up to date, without breaking the bank.

Juggling multiple equity schemes

Like many businesses founded in the UK, Codat started using EMI options to attract and retain early employees. Keeping track of new grants, valuations and exercises meant manually updating the cap table on Excel – an approach the startup quickly outgrew.

Once Codat opened offices in the US and Australia, managing employee equity became a lot more complicated. “We now offer ISOs and NSOs to our US employees, while those based in the UK and Australia receive growth shares,” Rebecca explained.

Although the company no longer meets the eligibility criteria for granting new EMI options, Rebecca continues to maintain Codat’s EMI share plan for existing grantholders. Thanks to Carta, she’s able to automate the majority of her equity-related admin. 

Being able to manage several equity schemes in one place is fantastic. I can track post-termination exercise dates, send exercise notices and invite employees to exercise their options from within the platform. It’s saved me so much time.

Rebecca McKenzie
Head of Legal, Codat

As Codat continues to issue growth shares, incentive stock options (ISOs) and non-qualified stock options (NSOs), Rebecca is responsible for ensuring every grant corresponds to a valid company valuation. Before joining Carta, the startup relied on third-party services for its 409A valuations and growth share valuations – an arrangement that wasn’t worth the time and cost.

High maintenance valuations

Requesting valuations from multiple providers that couldn’t integrate with Codat’s cap table was a huge drain on Rebecca’s time and energy – precious resources for any startup leader.

“Even though we provided all the necessary information for our 409A valuation upfront, there was still a three-week turnaround for the draft report. On top of that, it often took the analysts another week to resolve any questions I had.”

The problems really started when Rebecca tried to set up a growth share plan for employees in the UK and Australia. “Getting a growth share valuation from our external advisors was probably one of the most painful experiences of my professional life,” she recalled. “They were so risk-averse that it took them over a year to decide on a valuation.”

Rebecca attributed the analysts’ hesitation to the fact that growth shares are relatively “uncharted territory” compared to more common securities like share options. “There are lots of different ways of issuing growth shares and everyone’s still trying to figure it out,” she explained. 

Nonetheless, she expressed frustration at the amount of back-and-forth involved in such a costly service.

“The advisors were suggesting a higher value than we thought was appropriate for the stage and size of our business, which defeats the whole point of using equity to incentivise employees. In the end, we spent a lot of time capturing the relevant information so they could arrive at a more appropriate valuation.”

Cutting costs without sacrificing quality

Migrating to Carta transformed Codat’s equity management experience, taking the stress out of every step of the valuations process. “Working with Carta was so quick and reasonable,” Rebecca said. “After we requested a 409A valuation, we were given an estimated delivery time of around seven days for the first draft. Such a quick turnaround is almost unheard of.”

Beyond the efficiency of Carta’s service, she also appreciated having an open channel of communication with a dedicated valuations analyst.

With our previous 409A provider, it seemed like there were 100 people working on the valuation. It was so much easier to talk to one person at Carta who understood our business and everything else going on in the market.

Rebecca McKenzie
Head of Legal, Codat

To achieve sustainable growth in the current economic climate, Codat’s leadership team has been keeping a close eye on the budget. In Rebecca’s eyes, any tech solution that saves time and money is a win-win.

“Having unlimited valuations included in our Carta subscription has saved us tens of thousands of pounds – it’s basically paid for itself. Managing all of our equity schemes on the platform is also a huge time-saver,” she reported. “Everything can be done with the click of a button now.”

With Carta, cost-saving doesn’t come at the expense of quality. Impressed with the expertise and commercial awareness of the Carta valuations team, Rebecca is confident that Codat’s growth share valuation could withstand a company audit. “The report is incredibly clear, with plenty of data points and evidence. I’m confident in the valuation provided by Carta.”


DISCLOSURE: This communication is being sent on behalf of eShares, Inc. dba Carta, Inc. (“Carta”). This communication is not to be construed as legal, financial, accounting or tax advice and is for informational purposes only. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein.

This post contains links to articles or other information that may be contained on third-party websites.  The inclusion of any hyperlink is not and does not imply any endorsement, approval, investigation, or verification by Carta, and Carta does not endorse or accept responsibility for the content, or the use, of such third-party websites. Carta assumes no liability for any inaccuracies, errors or omissions in or from any data or other information provided on such third-party websites. 

© 2024 eShares, Inc. dba Carta, Inc. All rights reserved. Reproduction prohibited.

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