For more than 100 years, companies have existed in a binary world, either private or public. Private companies have been highly restricted in how they can raise money, sell stock, provide employee liquidity, and otherwise manage their ownership. Public companies have been highly exposed, subject to intense daily and even hourly scrutiny, with rapidly fluctuating stock prices and enormous external pressure that risks compromising a focus on innovation.
CEOs, investors, and employees have long felt that a superior third configuration must exist, particularly for growth stage companies that are not yet ready to be fully public because they are still investing in aggressive growth. But that third configuration hasn’t existed, until this week. Now it does, thanks to the CartaX private exchange.
Last night, our portfolio company Carta completed the first auction of its own stock there. 414 market participants bought private Carta stock, across 1484 executed orders, totaling $99.7M in trading volume. CartaX enabled Carta to unlock meaningfully more demand for its stock and engage in market-driven price discovery long before it would otherwise have raised new private capital or conducted an IPO to go public.
This successful auction — with Carta eating its own dog food by transacting its own stock — shows that the CartaX system is now ready for general use by private growth companies that want the benefits of a true exchange prior to, or as an alternative to, going public. We think the existence of this system is positive for all constituents in the startup ecosystem: the companies themselves, their employees, their existing investors, and new investors who get the opportunity to buy their stock.
We are proud to have led Carta’s Series E nearly two years ago, motivated by this vision and plan. We will now recommend this approach to our portfolio companies when they reach the stage where this approach is suitable for them. We will also be a buyer ourselves of private company stock via the CartaX exchange. And we suggest that companies and investors throughout the tech industry consider CartaX as well. The third configuration — beyond the false binary of simply private or public — is here.