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There's been a lot of buzz about @cartainc's CartaX platform coming in January.
But, what is it?
How does it work?
What does it mean for companies, employees, and investors?
@sacra has the inside scoop. Sign up here for CartaX coverage: http://sacra.com
But, what is it?
How does it work?
What does it mean for companies, employees, and investors?
@sacra has the inside scoop. Sign up here for CartaX coverage: http://sacra.com
Per @SandroChess, VP of Sales at Carta, CartaX lets companies "create their own custom private market for their stock," where employees/mgmt. & investors are sellers, and the company controls who gets to buy the stock.
In a recent interview with @FinancialTimes, @henrysward told @MilesKruppa that “If CartaX wins, in 10 years there won’t be a NYSE or a Nasdaq,” https://www.ft.com/content/d52b0487-b13c-4bae-bf27-770518ff083d
Unlike @NYSE or @NASDAQ, companies control these transactions on CartaX, picking who can buy and who can sell.
Companies also choose how often to run these auctions.
Auctions work by CartaX auto-matching buyers and sellers based on supply and demand.
Companies also choose how often to run these auctions.
Auctions work by CartaX auto-matching buyers and sellers based on supply and demand.
The result is a more efficient market where prices are tightly correlated to the supply and demand for the stock, and the company's value.
We sat down with @CKevers, Carta's CFO, who told us this pricing mechanism gives CFOs a "powerful tool to know what their stock is worth"
We sat down with @CKevers, Carta's CFO, who told us this pricing mechanism gives CFOs a "powerful tool to know what their stock is worth"
It's important to note that CartaX auctions are not tender offers.
Tender offer pricing is usually set by VCs in a term sheet at the time of a preferred round.
On CartaX, pricing is determined by supply and demand, just like in public markets.
Tender offer pricing is usually set by VCs in a term sheet at the time of a preferred round.
On CartaX, pricing is determined by supply and demand, just like in public markets.
When an auction opens, the company picks the buy/sell-side participants.
CartaX then begins matching buyers and sellers programmatically.
At the end, the settlement of shares happens on CartaX instantly, because the companies already use Carta to manage their cap table.
CartaX then begins matching buyers and sellers programmatically.
At the end, the settlement of shares happens on CartaX instantly, because the companies already use Carta to manage their cap table.
In short, CartaX allows companies to decide whether or not they want to go public to get regular liquidity, and offers liquidity as an incentive to employees, management teams, and investors...
This means employees at growth-stage private companies will be on par in terms of equity liquidity with the likes of
@Facebook, @Apple, @Google, @netflix, and @Tesla
No more SPAC-envy or grass-is-greener posts on @BlindApp https://twitter.com/jonbma/status/1338647447191564289
@Facebook, @Apple, @Google, @netflix, and @Tesla
No more SPAC-envy or grass-is-greener posts on @BlindApp https://twitter.com/jonbma/status/1338647447191564289
Conversely, employees at CartaX listed companies will actually have easier exposure to BOTH private and public stock.
A newly-liquid CartaX millionaire will have an easier time buying $TSLA in their @RobinhoodApp than a Tesla employee would buying private stock.
A newly-liquid CartaX millionaire will have an easier time buying $TSLA in their @RobinhoodApp than a Tesla employee would buying private stock.
VC's can rebalance their portfolios and increase VC fund returns by regularly de-risking, or taking chips off the table for successful companies.
Likewise, secondary investors (that the company picks) will have buying opportunities on the buy-side. https://twitter.com/GavinSBaker/status/1272978879033102336
Likewise, secondary investors (that the company picks) will have buying opportunities on the buy-side. https://twitter.com/GavinSBaker/status/1272978879033102336
Incumbent liquidity platforms have a focus on buyer-centricity and "deal flow" for secondary investors, vs. working with issuers directly.
A focus on issuer-centricity for CartaX is what seller-centricity is for @Shopify, according to Carta board member @arjunsethi
A focus on issuer-centricity for CartaX is what seller-centricity is for @Shopify, according to Carta board member @arjunsethi
An issuer-centric model unlocks the bottleneck of liquidity at the company level. 1 reason it's so hard to buy and sell stock in the secondary markets today is that these transactions are often done to circumvent the company, which creates all kinds of issues on their cap table.
While CartaX is a novel concept, it's clear that it has several unique competitive advantages to become the private markets' NYSE.
The big question is: Can CartaX pull this off?
Sign up here for our CartaX coverage: http://sacra.com
The big question is: Can CartaX pull this off?
Sign up here for our CartaX coverage: http://sacra.com
