Carta, a Silicon Valley equity management start-up, plans on launching a private share trading platform by the end of the summer that could rival leading stock exchanges. The eight-year-old Palo Alto company’s ambitious move was fueled by the desire to provide a platform for private tech companies to get in on early share trading.
The CartaX exchange will kick off by offering its own company shares before venturing out to other customers. Henry Ward, Carta’s CEO, sees CartaX as a way for investors and employees alike to be able to cash out shares before companies hit the public markets. If successful, Ward feels that CartaX could be a serious game changer in the world of trading. “If CartaX wins,” he theorized, “in 10 years there won’t be a NYSE or Nasdaq.”
While that level of confidence may not be shared across the industry, Mr. Ward has reported that an impressive 15 companies and 40 investors have already applied to participate in the recently announced exchange. Companies on the platform will be required to have a value exceeding $1 billion, offering up a minimum of $50 million in shares.
The company now has a $1.7 million valuation, having just raised $300 million in a Series E round with Andreessen Horowitz. The investment firm’s co-founder, Marc Andreessen, also joined the CartaX board. Ward posits that the main attraction for investors is the potentially high volume of activity in a market that has previously been ignored: “Now that you have this network of companies and investors all on one platform, and the ability to transfer securities, you can build liquidity on top of it.”
However, Carta has not been completely immune from the financial effects of COVID-19. Sales did take a massive hit in recent months, and mid-April saw the layoff of 161 Carta employees, or approximately 16% of its workforce. Carta board member and Lightspeed Venture Partners’ Will Kohler said that, despite the immediate setbacks, the Coronavirus will not impact the company’s long-term strategy. He provided a much-needed silver lining by saying, in reference to both the virus and subsequent layoffs, “It really does not change Carta’s unique positioning to continue on this path, with the ultimate goal of providing programmatic liquidity of scale.”