Photo: Carta
Carta, a Palo Alto, California-based global ownership management platform company, announced that it has raised $300 million in Series E funding at a $1.7 billion valuation. Andreessen Horowitz led the round and Marc Andreessen is joining the company’s board in conjunction with this funding round.
New investors Lightspeed Venture Partners, Goldman Sachs Principal Strategic Investments, Tiger Global, and Thrive Capital also participated in this funding round. And previous investors such as Tribe Capital, Menlo Ventures, and Meritech joined as well.
Through Carta, private companies, public companies, and investors are able to manage cap tables, valuations, investments, and equity plans. Founded by CEO Henry Ward and “Chief Firestarter” Manu Kumar, Carta is going to use the funding to “blur the lines” between public and private investment assets and for expanding its presence in traditional capital markets, according to Business Insider.
“We believe Carta will change how Wall Street and the financial world operate by transforming private markets. Carta has created an extensive network of LPs, VCs, and growing startups. That network effect is why I’m bullish on the future of this company — Carta is redefining business ownership as we know it,” said Andreessen.
Due to the rapidly increasing valuations of technology startups, Carta has experienced significant growth in a short period of time. This is evidenced by Carta’s own valuation increasing nearly $1 billion in just five months. In December 2018, Carta had raised $80 million in series D funding at a valuation of about $800 million. Including this recent round of funding, Carta has raised a total of $447.8 million.
“Carta started with this question: Why can I buy Google stock on my phone, but investing in a private company costs $20K in legal fees, takes 45 days to close, and ends with a mailed paper stock certificate?” wrote the Carta Team in a blog post. “In 2012, we began tackling this problem by offering an easier way to issue securities. When companies issue securities, we automatically track equity details on cap tables. Through our products for private companies, we reach venture capitalists and employees, laying the foundation for the ownership network. More than 11,000 companies and 700,000 shareholders (investors and employees) are now on Carta.”
The reason why Carta had to raise so much money is that it is building “a new financial infrastructure” and “that is expensive.” That is the answer that Ward gave Business Insider.
And the funding will also help Carta build out CartaX. This is essentially a stock market for privately held assets such as shares in a private company. To build this platform, Ward told Business Insider that it wanted to bring on investors with experience in capital markets. This will especially be important as companies are pushing to stay private for longer periods of time and fewer Americans have equitable access to investment assets.
Initially, Carta started out as a fund administration tool for investors last year. And now that aspect of the operation will make up 20% of the company’s revenue by the end of this year. And the fund administration handles more than $9 billion in assets under management and is achieving a $5 million annual run rate.
Currently, Carta is serving about 25% of the venture market and it is adding about ten to fifteen firms to the fund management tool every month. Many of the companies that prepare to go public have been using Carta as part of the process. VCs have been coming to Carta for full-service fund administration, a real-time platform for portfolio management, and a secure way to share information with limited partners. In total, Carta now has a registry of $575 billion in assets and its ownership network and ability to acquire assets is growing faster every day.
Since private markets are so illiquid, often times founders and employees have to wait a decade for an IPO to earn more from their equity. Carta believes that this is a problem that has to change.
“We’re excited about Carta’s vision and the ownership network they’re building, and we believe the company is best positioned to change how capital markets work. This investment supports our ongoing mission to back companies that are shaping culture and the way we live and work,” added Will Kohler of Lightspeed Venture Partners.
Fenwick & West LLP represented Carta in this deal. And the Fenwick transaction team was led by corporate lawyers Michael Brown, Morgan Sawchuk, Doug Sharp, Jennifer Cho, and Carson Jackson.
