Carta’s valuation to be cut by $6.5 billion in upcoming secondary sale | TechCrunch

🌈 Abstract

The article discusses the challenges faced by Carta, a Silicon Valley startup that has seen a significant drop in its valuation from a high of $8.5 billion to a potential $2 billion in a secondary sale. The article covers Carta's history, its pivot from cap table management to a "private stock market for companies," and the issues it has faced, including a public relations disaster earlier this year when a customer accused the company of misusing its data to sell shares without the company's knowledge.

🙋 Q&A

[01] Carta's Valuation and Business Challenges

1. What is the current valuation Carta is working on for a secondary sale?

• Carta is working on a secondary sale that would value the company at $2 billion, down from an initial target of $4 billion.

2. What were Carta's previous valuations?

• Carta's valuation increased from $1.7 billion in 2019 to $3.1 billion in 2020, and then to $7.4 billion in 2021 and $8.5 billion in 2022.

3. What are some of the challenges Carta is facing?

• Carta lost $65 million in 2023 and is struggling to make its fund administration business profitable.
• Some of Carta's earlier customers have grown so large that they have moved on to bigger banks for the same services Carta provided.

4. What was the public relations disaster Carta faced earlier this year?

• A customer, Karri Saarinen, accused Carta of using information about his company's investor base to try to sell its shares to outside buyers without the company's knowledge or consent. This led Carta to exit the secondary trading business.

[02] Carta's History and Funding

1. What was Carta's original focus and how did it evolve over time?

• Carta originally focused on cap table management software but evolved to become a "private stock market for companies," aiming to become the transfer agent, brokerage, and clearinghouse for all private stock transactions.

2. How much funding has Carta raised over the years?

• Carta has raised roughly $1.2 billion from investors, including Union Square Ventures, Andreessen Horowitz, Spark Capital, and Tribe Capital.