The big idea was to become the transfer agent, brokerage and clearinghouse for all private stock transactions in the world.
Roughly 15 months later, in late 2022, the company’s CEO, Henry Ward, told Axios that Carta was worth even more – $8.5 billion – following a separate secondary sale.
(He did not disclose how many shares were sold at this valuation or who bought them.)
Now, Carta is seemingly returning to its roots – and an earlier valuation that’s probably better suited to the business.
Over the years, Carta has raised roughly $1.2 billion from investors, according to the startups tracker Tracxn.
A South Korean startup called QuotaLab is on a quest to follow in the footsteps of Carta, the cap table management company that’s used by a host of startups and investors in the U.S.Carta started life as “eShares” in 2012 as a cap table management service that startups could use to issue equity to their investors and employees.
Today, its stable of offerings has expanded to include everything from valuation and equity management, to bookkeeping, risk assessment and brokerage services.
A Y Combinator alum, QuotaLab also started off as an equity management service (called QuotaBook) for startups and investors in South Korea.
It also offers investment management such as investments, returns, asset changes, markdowns, valuations, accounting, e-approvals and risk management,” Choi added.
According to Choi, the equity management market has many sides you can tackle.
In this edition, I’m going to look at some hits and misses in the real estate fintech space, Carta’s missteps (again), and more!
A prominent customer accused Carta of misusing sensitive information that startups entrust to the company in pursuit of its own goals.
Meanwhile, Alex and Anna argued that Carta’s growth story is being overshadowed by its stock trading snafu.
Analysis of the weekThe real estate fintech space continues to have its ups and downs.
I also reported this week on Downpayments’ mission to help investors purchase new properties with interest-free down payments.
In this edition of WiR, we cover Carta’s allegedly unethical tactics, Samsung’s Ballie home robot, Volkswagen bringing ChatGPT into its cars and Amazon embracing more generative AI.
Saarinen alleged in a LinkedIn post that Carta misused sensitive information that startups entrust to the company in pursuit of its own goals.
Samsung’s Ballie returns: Remember Ballie, Samsung’s spherical home robot from CES 2020?
Volkswagen cars get ChatGPT: Volkswagen is getting into the ChatGPT game.
Enterprises skeptical of GenAI: Generative AI gets a lot of press, from image-generating tools like Midjourney to Runway to OpenAI’s ChatGPT.
Cap table management startup Carta has been dealing with a PR nightmare for the past couple of days.
The short of it is that one sales employee, according to Carta, used confidential data from one of the company’s customers to craft a sales pitch for a secondary stock sale.
The problem, according to Carta, is taken care of.
Before we dive into what this mess might portend for Carta, we need to understand the state of affairs at the company before this came to light.
While Carta hasn’t raised a round since that 2021-era transaction, per secondary data from platforms like Hiive Markets, Caplight and Notion, its current valuation is estimated to be about half of its last primary round.
Carta’s decision to exit the secondary share trading business was a quick response to the controversy that emerged after it was chastised by customers for using private data to foster its equity transactions.
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After a customer criticized Carta for working to connect buyers and sellers of startup shares on its secondary trading platform without permissions, there have been several questions regarding data security and just what — or who — its product is.
Cloudflare’s CEO and co-founder, Matthew Prince, argued in the aftermath, for example, that the only way for Carta to “justify [its] multiple [and] valuation” was to pitch investors that it was going to build “the world’s biggest secondary market” predicated on the data it holds on behalf of its customers.
The big idea was to become the transfer agent, brokerage and clearinghouse for all private stock transactions in the world.
While the move made Carta more valuable in the eyes of its venture backers — a company has to scale after all!
In his post tonight, Ward downplayed the impacts of ending secondary trading on Carta, saying the revenue derived from the practice is minuscule compared with Carta’s other business offerings.
Striking a humble tone, Ward wrote that “ALL of my ideas around liquidity — auctions, investor matching, secondary trading, open tender offers, have not worked.
Many people think we are best poised to solve liquidity because we have cap table data.
But a prominent customer is now accusing Carta of misusing sensitive information that startups entrust to the company in pursuit of its own goals.
The claim is raising wider questions about how Carta operates, even as Carta argues the incident was isolated.
Feeling betrayed by Carta, Saarinen wrote on LinkedIn, “This might be the end of Carta as the trusted platform for startups.
Ward also said the email to the Linear investor is not something that Carta condones.
The cap table business and the CartaX (private stock liquidity) business are separate business units with separate teams and leadership.
Carta, a 10-year-old San Francisco software firm providing investors with portfolio tracking tools, has filed suit against its former CTO Jerry Talton. Talton was dismissed “for cause” on December 23rd.…
