Qapita Closes Series A Funding of IDR 213 Billion, Focused on Expansion to Indonesia

Startups legaltech Singaporean Qapita announced a series A funding round of $15 million (over 213 billion Rupiah) led by East Ventures through Growth Fund and Vulcan Capital. NYCA and past investors, including MassMutual Ventures, Endiya Partners, and several angel investors, including Alto Partners, partners from Northstar Group and K3 Ventures, participated in this round.

Previous, Qapita raised $5 million in the Pre-Series A round and $2,25 million in the early stages, respectively in April 2021 and September 2020. The company has raised a total of $22,25 billion in funding since its inception.

Qapita is a company legaltech which helps private companies such as startups to manage the recording of the company's share ownership structure (known as capital tabulation/stamp table) and employee stock ownership plan (ESOP). The startup was founded in September 2019 by CEO Ravi Ravulaparthi, COO Lakshman Gupta, and CTO Vamsee Mohan.

The three of them saw an opportunity to digitize and make the private capital market more efficient. The founders come from diverse professional backgrounds with more than 20 years of experience working as bankers, investors and technologists in South and Southeast Asia.

Co-founder & CEO of Qapita Ravi Ravulaparthi explained that his company will use the fresh funds to expand its operations in Indonesia, including strengthening its client base in Singapore and India. According to him, Indonesia is one of the fastest growing private markets in the world. Now is a good time to build operating systems and transaction rails for private enterprise ownership in the region.

“This relates to the use of technology to increase transparency, access, efficiency, and liquidity in the private market. This platform will also empower Indonesian startup employees in terms of ownership of their companies. The Qapita team is very grateful to our shareholders and partners in Indonesia who have supported this effort," said Ravulaparthi in an official statement, Wednesday (6/10).

The Qapita team has grown from 7 people, twelve months ago to around 65 people, today in Singapore and India. Qapita's operational scope is now spread across three countries, namely India, Indonesia and Singapore.

He reasoned that in these three areas companies identify opportunities to use technology because there are three main trends meeting. Namely, the rapid growth in the number of startups, the expansion of the number of venture capital, and the digitalization of finance.

Qapita estimates the value of private securities in the region will exceed $1 trillion-$1,5 trillion (with 200-250 unicorn) in the next few years and scalable digital solutions will be critical for the ecosystem to thrive. Qapita equity management software solves problems related to HR (ESOP), finance and fundraising issues for private companies, investors, shareholders and employees.

Marketplace from Qapita enables secondary transactions for stakeholders. Qapita estimates that more than USD 150 billion of equity will require various liquidity solutions.

Ravulaparthi continued, from this funding round, the company plans to add more products to its platform that not only provide solutions for private companies and startups, but also investors, shareholders and employees.

“Qapita also plans to facilitate liquidity solutions through digital marketplaces that enable transactions for companies between their investors and employee stakeholders.”

Co-founder & Managing Partner of East Ventures Willson Cuaca expressed his enthusiasm for re-investing in Qapita to build an operating system for the private market in the region. “Qapita can be a liaison network between private companies, their employees, shareholders and investors in all matters relating to equities. The startup ecosystem in Indonesia and other regions is growing rapidly," he said.

ESOP Trends in Indonesia

Skilled talent hunt is an important task for startups, but retaining talented staff is another big challenge. High salaries and benefits are the traditional way to retain talent. However, this strategy does not always work, especially when the startup faces competition from other, bigger and more established startups.

In an ESOP, the employer allocates a varying number of company shares to each qualified employee, depending on the salary scale or other aspects. ESOP usually comes with a period dressing, where employees are prohibited from selling shares.

Each employee's stock is held in the company's ESOP trust until the employee retires, leaves the company, or is allowed to sell their shares. Once fully entitled, the company can “buy back” shares from employees, either in its entirety or periodically through liquidity or buybacks.

The plan was created to increase the dedication of employees to achieve positive results for the startup, as the value of their shares will increase along with the value of the company. By owning shares in the company, employees are less likely to leave, thus potentially reducing employee turnover rates for startups.

The ESOP trend is becoming a method that is slowly being used in Southeast Asia for small startups to attract and retain talent. In Indonesia itself, according to Ravulaparthi, this concept is just getting popular. While in India, it has been implemented since the last three years.

A joint survey conducted by Monk's Hill Ventures and recruitment platform Glints found that in Southeast Asia, equality is a common compensation for C-level staff and other executive-level employees, but is not limited to junior or mid-level employees. The survey stated that less than 32% of participants were compensated in the form of equity. The preference for cash payments is the main reason for the low proportion.