When we think about Southeast Asia’s tech and investment scene, startups and venture capitalists (VCs), we look at the fast pace and dynamic ecosystem as a blue ocean of opportunity. However, the reality is that most startups and VCs often face challenges with managing funds, keeping track of company ownership and dealing with the complexities of new shareholders.
We wanted to find out more and had a chance to speak to Bhavik Vashi, Carta‘s Managing Director for the Asia Pacific & Middle East. His experience allows him to share the ins and outs of the financial challenges in this region and how technology can help solve them.
What are the top-funded startups in Southeast Asia right now?
Carta is known for its innovative platform that simplifies equity management and fund administration. As more money flows into the region and investors look for diverse opportunities, the need for clear and efficient fund management is growing. Bhavik’s experience and insights are key for startups and VCs looking to stay ahead of the game.
We’ll dive into the big challenges that startups and VCs face, how technology is changing the game, and the common mistakes to avoid. We’ll also look at the future trends in the industry and what Carta has planned for the region. So, let’s get started and explore how to navigate the complex world of fund administration and company ownership in Southeast Asia’s tech sector.
What is your perspective on the most pressing challenges that startups and venture capitalists (VCs) in Southeast Asia face when it comes to fund administration and capitalisation tables?
Across Southeast Asia, we’ve observed a gap between the equity management standards among start-up founders and VCs, and the expectations of global investors and LPs. The gap exists for several reasons.
A significant challenge lies in the widespread reliance on manual administration for business-critical items like cap tables and fund accounting. Today, startups and investment funds manage both of these items primarily through spreadsheets, e-mails, PDFs, and in some cases, physical documents. A high degree of manual processes is not only inefficient, but is critically prone to human error. This dependence can result in data fragmentation, leaving employees, founders, CFOs, GPs, and LPs all with limited visibility into ownership structures, investment performance, and capital status. The situation is further exacerbated when a single person manages this manual process, which is often the case in small startups and lean investment firms, creating knowledge silos that can disappear upon personnel turnover.
The other challenge is that the regulatory environment across Southeast Asia markets is still relatively fragmented and less mature compared to more developed regions. This can lead to inconsistencies, resulting in uncertainties in equity administration practices as well as hinder alignment with global standards.
Against this backdrop, the region is also experiencing a surge in capital inflows. Companies like Blackstone, KKR, and Tiger have expanded their operations in Singapore. The surging number of family offices in Singapore (over 1,400 according to the Monetary Authority of Singapore) also reflects a growing appetite for diverse investment portfolios. Managing these complex structures, encompassing private equity, venture capital, and unique real estate assets, can be challenging. This has propelled the demand for enhanced transparency which is crucial for building trust and attracting further investment.
How does Carta’s platform address these challenges, and what sets it apart from traditional methods of fund administration and cap table management?
Carta brings the most comprehensive private equity management platform in Southeast Asia. We empower companies to manage their cap tables, employee equity, and shareholders effectively. Additionally, Carta helps investment funds streamline accounting, reporting, compliance, and investor management, while adhering to regulatory obligations.
What sets Carta apart is our unique position as a centralised registry of all private assets. We are the only provider that can track ownership and investment positions across all nodes – employees, founders, investors, and LPs – all on a single software platform.
We are passionate about creating a delightful customer experience, akin to what you might experience on a daily basis on any of your favourite consumer apps. As such, we relentlessly prioritise an intuitive user experience, despite the complexity of some of the problems we solve, to make it extremely easy for each of these stakeholders to navigate our platform and access relevant information.
We have spent the past decade turning key services into software, with seamless cap table management, the fastest valuations, and a real-time schedule of investments as our staple offerings. These are only possible with an incredible amount of underlying automation. For example, on the fund administration side, we build our own proprietary, event-based General Ledger that captures and books entries in real-time as they happen and paired that with a mobile app called Carta Carry that our fund managers can carry in their pockets. Every time they make a capital call, an investment, an expense, or a distribution – it’s captured.
Besides eliminating the need for manual record-keeping, we also integrate seamlessly with various software tools and platforms commonly used by companies, such as payroll systems, accounting software, and HR systems. We offer APIs for our ecosystem partners to integrate Carta data into their applications and leverage it for adjacent use cases like equity financing, personal wealth management, and tax/estate planning.
In summary, the level of aggregation, automation, and integration Carta offers, via a consumer-grade interface, goes far beyond the capabilities of the manual administration options currently available to startups and investors. Recognising this advantage, our partners trust our solutions, with over 40,000 start-ups and 10,000 investors who trust us to run their back-office operations. In fact, 65% of all venture capital flows involve companies using Carta.
How do you see technology transforming the way fund administration and capitalisation tables are managed? Can you provide some examples of these technological advancements in action?
Public markets have seen significant investment and innovation in building transparency. At the same time, the private equity world remains fragmented and lacks the same level of sophistication. In our case, we have addressed this challenge by using technology to centralise critical functions. They include ensuring accurate and up-to-date cap tables, and compliance management tools that simplify compliance processes. Through automation, we help companies reduce errors, improve efficiency, and ultimately, enhance transparency for all stakeholders.
A good recent example is on the cap table side. We recently collaborated with Endowus, a leading digital wealth platform in Asia, to address challenges faced by employees of startups regarding liquidity in their equity holdings. Endowus has a passionate commitment to employee ownership through its unique equity structure, which includes broad ownership by employees through direct investments and an employee stock ownership program (ESOP). With this collaboration, Endowus’ employees can now easily manage their ESOP shares on Carta’s platform, which offers visibility into vested shares, exercisable options, and vesting schedules. Our solutions, including the look-through of securities held via special purpose vehicles (SPVs), have also been instrumental in managing ownership for Endowus and its employees. The partnership aims to also facilitate more regular secondary transactions, providing liquidity and access to employees, thereby enhancing transparency, flexibility, and talent retention.
Improved transparency through the use of technology can streamline due diligence for investors. This translates to a smoother flow of capital into private companies, fuelling growth and innovation. Additionally, it empowers founders by streamlining the process of launching transformative businesses and fosters a sense of ownership in employees by helping them understand their compensation better.
From your experience, what are some common pitfalls or mistakes that startups and VCs make in managing their capitalisation tables and fund administration?
Manual equity management practices in Southeast Asia pose challenges for both businesses and regulators. Fundamentally, manual systems struggle to adapt to growth. As companies and funds expand, the administrative workload increases significantly, and this can lead to inefficiencies and hinder further growth.
On the regulatory end, opaque ownership structures can hinder regulators’ ability to gather accurate market data for informed decision-making. This can potentially impact the region’s ability to maintain a free investment approach. For example, the Monetary Authority of Singapore, which fosters business growth through transparency, may face difficulties promoting this approach if manual administration persists. After all, regulators need insights into factors like investment duration, valuation, and risk management practices to ensure market stability and manual record-keeping hinders access to this crucial information.
Another pitfall for investment funds is that when they rely on individual accountants for fund administration, their absence or turnover creates a critical vulnerability for the fund itself. This is especially true for larger funds, which generally support more complex and bespoke arrangements with their Limited Partners. Losing this context due to employee turnover often results in consequences like missing regulatory reporting deadlines, potential violations of regulations, inaccuracies in financial statements as well as an opportunity cost in the use of time for decision-making.
To prevent such outcomes, start-ups and VCs should implement robust data management practices early, standardise systems and tools, and invest in technology. Growth is a cause for celebration, so don’t let your back office stand in the way of that!
Looking ahead, what trends do you foresee in the evolution of fund administration and cap table management in Southeast Asia?
By working with the region’s most innovative minds – founders and VCs – we stay at the forefront of emerging trends.
AI is top of mind for everyone right now, and we expect its applications to extend into fund administration and cap table management as well. For example, we are already working on some exciting use cases to leverage LLMs to streamline the processing of legal documents and translating them into structured, real-time accounting, compliance, and reporting workflows. This has huge potential benefits for the back office operations of both startups and investment funds alike.
The resurgence in cryptocurrencies is resulting in a growing interest in alternative investments in general. In addition to tokens, this includes art, collectibles, real estate, etc. Funds will need to adapt their services to support the unique requirements of alternative investment strategies, including complex valuation methods, illiquid assets, and associated regulatory compliance.
There remains a consistent growing interest in ESG factors in investment decision-making. For example, observing the trends in VC capital deployment is always an interesting way to think about trends and, over the past 6 months, “clean tech” is the only vertical that has seen significant (250%+) YoY growth. And while investor demand is the primary driver, we anticipate that we will see more regulation in this space in line with geopolitical trends. Singapore’s recent announcement of mandatory climate reporting for listed and large non-listed companies in 2025 exemplifies this shift. We expect this trend to eventually encompass the broader economy as well. Funds will need to factor ESG considerations into their administration for reporting and compliance, and to support their GP and LPs in meeting their ESG objectives.
In general, as the appetite for alternative investments continues to grow, we expect investors to demand more visibility and consistency in reporting from both startups and VCs. Meanwhile, we expect government regulation across the region to converge to enable cross-border investment while meeting evolving and increasingly global investor requirements.
What’s next for Carta in the region?
We’re at an extremely exciting stage of our journey, potentially the inflection point. Despite many of the bearish sentiments we’ve observed in the broader private markets, we managed to triple our sales year-over-year in 2023 across APAC & the Middle East. This is validation of a very strong product-market fit for our software and services in this region, despite unfavourable market conditions. As those market conditions reverse the trend, we are excited to serve as a foundational technology platform supporting the growth of both startups and investors alike. This is why we recently established a permanent office in Singapore, signifying our long-term commitment to the region.
Specifically, this year, we are doubling down our focus in Singapore and SEA with increased hiring and go-to-market efforts. We’ve been serving these regions since 2021 and will continue to focus on creating an exceptional customer experience for this core market, especially as we start to support larger funds. Additionally, with the success and growth that we’ve experienced in the past 12 months, we have increased conviction in our ability to solve the “due diligence dilemma” that exists in all private markets across the region. As such, this is the first year in which we are expanding to new markets across the region, such as Australia, India, Hong Kong, and the Middle East. We are investing significantly in R&D across both our startups and investor business units to further localise both products and ensure we cater to regional tax, law, and accounting specifications in these new markets.
Carta has spent a decade turning key services into software, with automated cap table management, the fastest valuations, and real-time SOI as staple offerings. Today, as the trusted solution by over 2 million employees, 40,000 startup founders, 200,000 LPs, and 10,000 fund managers globally, we will continue to entrench ourselves as a local ecosystem enabler and continue our mission of making private markets more accessible, transparent, compliant, consistent, and equitable.