CartaX Facilitates First Independent Transactions on Cap Tables

The Growing Demand for Startup Share Liquidity

As startups extend their private status and securing liquidity proves increasingly challenging for both early employees and investors, a rising number of shareholders are actively seeking avenues to transfer their equity. As early as 2011, platforms like SecondMarket were facilitating secondary share trades valued in the nine-figure range.

Challenges in Early Secondary Markets

This initial surge in startup liquidity encountered two primary obstacles: regulatory hurdles and a scarcity of comprehensive company data regarding cap tables and current financial performance. Potential stock purchasers were, in essence, operating without full visibility into their investments.

While some investors were willing to accept this uncertainty, the lack of information significantly constrained demand for secondary shares.

CartaX: A New Approach to Secondary Trading

Carta aims to leverage its established position as a leading cap table management solution to introduce a new service, CartaX. Rumors of this service have circulated for over a year, and recent announcements from founder Henry Ward indicate its official launch and operational status.

Recent Transaction Volume on CartaX

Recently, Carta facilitated nearly $100 million in share sales across 1,484 market orders, involving 414 participants, through its CartaX platform. This transaction valued the company at $6.9 billion, a substantial increase from the $3.1 billion valuation established during its Series F funding round last year.

CartaX vs. Traditional Secondary Transactions

Typically, secondary transactions involve direct, manual negotiations between individual buyers and sellers. CartaX distinguishes itself by potentially enabling faster and more frequent secondary sales, utilizing computerized trading models similar to those employed in traditional stock markets.

The Importance of Liquidity for Startups

Access to liquidity remains a critical concern for startups. Although CartaX is in its early stages, it addresses a significant need within the startup ecosystem and represents a key financial product to monitor as it develops throughout 2021.

Carta’s Financial Performance

Carta’s revenue performance is also noteworthy. According to reporting by Zoë Bernard and Cory Weinberg at The Information, the company currently boasts an Annual Recurring Revenue (ARR) of $150 million.

This translates to a revenue multiple of 46x, a valuation considered favorable for SaaS companies contemplating an initial public offering.