It’s hard to walk around New York, Tel Aviv or Silicon Valley without falling over a fintech founder. So when a fintech hits the bigtime, it’s worth paying attention to how the founders did it.
Crowded Technologies is one of those success stories.
Founded by Daniel Grunstein, Dvir Hanum & Darryl Gecelter in March 2021, the New York based company focuses specifically on servicing organisations that do not return profits to their shareholders (i.e. charities or other organisations that don’t use a typical LLP or other profit-returning corporate structure). In the US, these organisations are called 501(c)s.
“Working at JP Morgan, I saw first hand there were plenty of retail fintechs out there servicing SMBs - but every deal required placing a business into either a ‘consumer’ or ‘commercial’ bucket - there was nothing in between” says Grunstein.
Grunstein adds that “501(c)s look and smell like regular businesses but their cash flow needs are entirely different. These businesses have different organisational structures, ad hoc spending, volunteers, frequent changes in leadership which create difficulties with everyday occurrences such as authorising bank signatures.”
These roadblocks, according to Grunstein, create issues for 501(c)s when it comes to how they bank and how they spend their money. Seeing this gap in the market, he and his team got to work creating the bespoke product that is Crowded.
Part of what makes the business so successful is that there are no direct competitors. Platforms like Chime, Brex and even Venmo either offer solutions that are too expensive and require significant tailoring to each company, or act only as a band aid solution.
What happens when the cap table gets crowded?
Crowded has had significant traction since its launch in 2021, intentionally targeting sororities and fraternities as the platform’s early adopters. A clever move by the company, given the volume of capital that flows through this market and its interconnections with other markets, via both alumni and member networks.
To date, Crowded has signed 1,100 chapters under 12 separate national organisations - and counting.
“Initial funding for the company consisted of numerous small cheques from family, friends, angels and micro VCs. Using excel spreadsheet after excel spreadsheet, we were losing track of our cap table and who we needed to communicate with” says Grunstein.
“Once we started using Cake to manage not only our cap table but our investor relations in general, an inordinate amount of time was saved. At a rough estimate, Cake would save me at least 15 hours a month in time spent on investor relations” says Grunstein.
A single source of truth
All this talk of cap tables and investor relations requires a quick re-cap.
A cap table isn't a legal document, but is a living breathing document that changes every time you give equity to employees or contractors via an ESOP, sell shares in your company or distribute equity in any way - so it’s incredibly important to make sure it’s up to date at all times.
With Cake’s cap table tool, you can enable access to the relevant stakeholders like accountants, lawyers, investors and employees, without being hassled endlessly for information that Cake puts right at their fingertips.
A friend of Grunstein recommended Cake to get on top of this seemingly ceaseless admin problem and he and his co-founders haven’t looked back since.
“It’s really good because it’s a single source of truth. If an investor asks for our cap table, we go to Cake. It also significantly reduces time spent on investor relations. Investors often ask for time consuming pieces of admin. With Cake, they have direct access” says Grunstein.
Juggling ESOPs is a piece of cake
Even more importantly, as an American company with foreign subsidiaries and ESOPs in numerous jurisdictions, Cake has made what would otherwise have been an administrative nightmare, a cake walk.
Crowded Technologies have 16 employees and counting, with a significant number of them issued options under an ESOP, affecting both the company’s cap table and the amount of admin the company needs to undertake to ensure everyone knows what their slice of the cake looks like at any given moment in time.
“Using Cake for administering ESOPs across jurisdictions has not only saved us significant time but it’s kept our employees’ minds at ease, as they’re provided updates on their options vesting along the way” adds Grunstein.
He also notes that it’s particularly important for early stage companies to manage ESOP relations via Cake’s platform to ensure the process begins correctly and there are no bumps down the road, as a company grows.
Like all things in life and in business, getting ahead of the game is the game.
The Wrap Up
If you’re a founder, you know that running a business is juggling a thousand tiny balls that may fall at any moment. The good news? You can delegate much of the juggling to Cake.
Cake is committed to bringing equity best practices to founders everywhere with the perfect blend of accreditation, automation, and professional advice. Explore Cake for free today and make the juggle that little bit easier tomorrow.
This blog is designed and intended to provide general information in summary form on general topics. The material may not apply to all jurisdictions. The contents do not constitute legal, financial or tax advice. The contents is not intended to be a substitute for such advice and should not be relied upon as such. If you would like to chat with a lawyer, please get in touch and we can introduce you to one of our very friendly legal partners.