Yin Wu, with her fourth startup Pulley, is seizing the opportunity in the niche market for cap table management software, which is currently dominated by scandal-plagued Carta.
On Sunday, January 7, Yin Wu found her inbox flooded with inquiries from potential customers interested in her company’s product, which aids startups in tracking the ownership of their shares, commonly known as cap tables. Initially puzzled by the sudden surge in interest, Wu, aged 35, couldn’t comprehend why individuals would be discussing cap tables on a typical Sunday evening.
However, the reason behind the increased attention soon became evident. A LinkedIn post by Karri Saarinen, CEO of software project management startup Linear, had criticized Carta, the predominant player in capital table management, for trading Linear’s shares on its secondary marketplace without Saarinen’s authorization. A public spat between Saarinen and Carta CEO Henry Ward ensued on X (formerly Twitter) over the weekend, as the controversy reverberated across Silicon Valley. Ward attributed the issue to a rogue employee, while Saarinen claimed that other founders had faced similar problems.
Ultimately, on Monday, Ward published a public apology on Medium and announced Carta’s decision to close its secondary private shares trading operation to regain trust. However, by that time, many of Carta’s 40,000 customers had already begun exploring alternative solutions.
Meet Pulley, a San Francisco-based company emerging as a prominent competitor to Carta and earning a spot on this year’s Fintech 50 list. CEO Wu wasted no time diving into the competition, pledging on X that if founders made the switch to Pulley by the end of January, the company would discount its fees to offset the costs of their existing cap table contracts. This proactive move spurred an eightfold increase in demo requests compared to the previous month, attracting around 400 new customers. As a result, Pulley’s client base surged to 4,600, more than doubling from the 2,200 it had at the start of 2023.
For serial entrepreneur Wu, this was a fortuitous and well-timed opportunity. Unfazed by entering the cap table market seven years after Carta established itself as the leader, she believes that being first isn’t the only path to success in the long run.
Drawing a parallel to Stripe’s rise in the payment processing industry, Wu highlights that success often hinges on providing a superior user experience rather than being the pioneer. Despite existing players like Braintree, Amazon Pay, and PayPal, customers weren’t necessarily thrilled with their experiences. Wu’s bet is that Pulley can offer something better.
Currently, Pulley operates under the looming presence of Carta, boasting 40,000 customers and a valuation of $7.4 billion as of its last fundraising round in August 2021. While Carta declined to comment to Forbes, an analysis by market research firm CB Insights revealed that 89% of surveyed Carta customers expressed intentions to renew their plans.
Despite this, Pulley has secured $50 million in funding from prominent backers such as Stripe, Founders Fund, and angel investors like Elad Gil, Jack Altman, and Avichal Garg, who happens to be Wu’s husband. In its Series B round in October 2022, Pulley achieved a valuation of $250 million.
Wu asserts that Pulley’s technology for fundraising modeling surpasses that of its competitors. This technology aids founders in understanding the precise extent of their stake dilution due to complex early-stage funding structures. Additionally, Pulley offers tools such as the offer letter tool, which efficiently tracks equity grants to new hires on the cap table and streamlines the process of board approval and distribution of option grants.
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