eShares, a Palo Alto, Calif.-based equity management platform, has raised $42 million in a Series C funding round co-led by Menlo Ventures and Social Capital. Other investors include Slack CEO Stewart Butterfield and NBA athlete Andre Iguodala. As part of the deal, which brings total funding up to nearly $68 million, Menlo Ventures’ Matt Murphy and Social Capital’s Arjun Sethi will join the software company’s board of directors.
The five-year-old startup allows businesses to offer share certificates in electronic format to their shareholders, making it easier to issue, buy or sell shares in privately held companies online. While fintech has largely democratized access to investing in the public markets via major platforms like E-Trade and Schwab.com, investing in private companies continues to require bulky paperwork, lawyers and other middlemen.
“We still live in a feudal economy where ‘land owners’ have stock in firms and ‘serfs’ or workers, don’t. We are in the business of creating more land-owners. We want more people to have ownership in productive firms,” founder Henry Ward told CNBC in an interview. Ward ultimately indicates that his vision is to blur the lines of being a public and private company, to the point where they are almost indistinguishable. In such a situation, platforms like eShares would completely replace underwriting bankers.
eShares, which employs a subscription based business model for its software, works with 6,000 companies on corporate governance and compliance. Its services include a myriad of tools from cap table management to secondary transactions, as the company continues to build out its services and hopes to start working with companies on the IPO process.