Carta’s valuation set to decrease by $6.5 billion in upcoming secondary sale

Carta, a once high-flying Silicon Valley startup, is facing a significant drop in valuation as it works on a secondary sale that would value the company at $2 billion, according to sources. The company, which originally focused on cap table management software, evolved into a “private stock market for companies” with ambitions to become the transfer agent, brokerage, and clearinghouse for all private stock transactions worldwide.

After announcing a valuation of $7.4 billion in 2021, Carta’s CEO, Henry Ward, later claimed the company was worth $8.5 billion following a separate secondary sale. However, recent events have led to a reevaluation of Carta’s worth. In early January, CEO Karri Saarinen publicly accused Carta of misusing his company’s investor data to sell shares without consent, leading to a public relations disaster for the company.

In response to the controversy, Carta announced its exit from the secondary trading business, a move that has raised questions about the company’s future growth prospects. Despite generating $380 million in revenue last year, Carta also reported a $65 million loss in 2023. Additionally, challenges in making its fund administration business profitable have further impacted Carta’s financial outlook.

With a history of legal disputes and allegations of a toxic culture, Carta is now facing scrutiny over its business model and growth potential. As the company navigates these challenges, investors and industry insiders are closely watching to see how Carta will adapt to a changing market landscape.