| a lot of questions in the discussion on what problem this solves . . . rather than thinking about cartaX as a 'private stock exchange'—which is pretty abstract—i think it's easiest to think of it as a solution to the problem of employee, founder and investor illiquidity in private companies. problem: let's break down this problem of shareholder illiquidity generally. - hiring: it's hard for private companies to hire against FAANG because the latter offers liquid stock comp. we created a calculator that shows the impact of this https://sacra.com/research/startup-recurring-liquidity-calcu... - retention: employees bear the financial burden of illiquid stock because they often have greater liquidity needs than early investors and founders (who are able to take some off the table earlier). employees are the last to get liquidity because they're farthest from the money. check out our report on this https://sacra.com/research/tender-offer-pricing-data/ - admin: i've talked with CFOs who have to deal with one-off requests for secondary sales and it's an admin pain. solution: companies have taken to running tender offers, often bundled into the latest round of financing. you could say that the tender offer is the incumbent in the 'liquidity solution' space that cartaX is trying to dethrone (though to be clear, carta has its own tender offer product). what's different about cartaX? 2 things: (1) it has a market dynamic with competitive pricing and (2) T+0 settlement because carta has write access to the cap table. there are a few important players in the 'liquidity solution' space otherwise that are big players as well: - angellist recurring transfers: https://angellist.com/blog/recurring-transfers it doesn't have competitive pricing, but angellist has made it a quick and simple process which puts 1 line item on your cap table (angellist) - nasdaq private markets: https://www.nasdaq.com/solutions/nasdaq-private-market companies like asana and coinbase ran auctions via npm. they have market-driven pricing but they do not have T+0 settlement. also, they mainly use npm as a feeder into listing on nasdaq, so they are less incentivized to promote the growth of the private markets generally (contra angellist and carta). - forge: https://forgeglobal.com/solutions/companies/forge-company-so... taking more of a services oriented approach as a liquidity solution by working with companies. for more on this stuff, read https://sacra.com/research/the-privately-traded-company-seco... the upshot: cartaX is a liquidity solution for private companies, but because the solution comes through a competitive pricing in an auction, it creates this additional risk around not being able to know and control the price. this giving up control is hard for private companies who are used to controlling their cap table, price, scarcity of their stock, etc. |