Carta, a service for buying and selling shares in private companies,has built its business around the surging valuations of startups.
On Monday, Carta provided a firsthand example of the trend when it announced that its own valuation jumped by nearly $1 billion in the span of just five months.
The company announced it has closed $300 million in series E funding tied to a $1.7 billion valuation. Andreessen Horowitz led the round, and Marc Andreessen will join the company’s board to help Carta move beyond business-to-business asset management.
Carta most recently raised $80 million in series D funds in December that valued the company at $800 million. With Monday’s announcement, the company has raised a total of $447.8 million.
“We are building, growing quickly and growth is expensive,” Carta founder and CEO Henry Ward told Business Insider. “We’re building a new financial infrastructure, and that is expensive.”
Carta helps employees and investors sell stake in privately held companies through their online equity-management platform,formerly known as eShares.
Ward said the new funds would help the company build out CartaX, which is essentially a stock market for private assets, like shares in a private company. He said the company wanted to bring on investors with experience in capital markets to help build the company’s New York presence. Lightspeed Venture Partners, Goldman Sachs Principal Strategic Investments, Tiger Global, and Thrive Capital joined Monday’s round as their first investment in the company.
“Since the railroads, there’s been no liquidity in the private world,” Ward said. “A lot of people are trying to solve that problem and we might be the first company that gets to crack the code.”
‘My mom can’t even invest in my company’
Ward sees Carta’s growth coming predominantly from CartaX as more companies stay private longer and fewer Americans have equitable access to investment assets.
“My mom can’t even invest in my company,” Ward said. “Our goal is to create a private stock market where we will build democratized access to investments and private assets.”
Carta began by offering a fund-administration tool for investors in 2018, which Ward said is projected to comprise 20% of Carta’s overall revenue by the end of 2019 as the company’s fastest-growing product line. According to Carta, fund administration counts over $9 billion in assets under management with a $5 million annual run rate.
According to Ward, Carta serves about 25% of the venture market and adds 10 to 15 firms to its fund-management tool a month. He said part of the appeal for venture-backed companies is Carta’s ability to help them prepare to go public.
“When you look ahead, the IPOs in 2023 are the series B companies on Carta today,” Ward said. “The lines between private and public [markets] will blur over the next few years, and we are building the structure to allow those lines to blur.”