Carta’s Valuation to Face Massive Downround in Secondary Sale: $6.5 Billion Slashed from Private Equity Firm’s Market Capitalization

In a major development for the software sector, Carta, a company that operates a stock management platform for private companies, is set to see its valuation slashed by billions as part of an upcoming secondary stock sale. Sources familiar with the matter have confirmed that Carta’s valuation will be cut by a massive $6.5 billion compared to its previous valuation of $9 billion achieved last year.

Carta became a decacorn, or startup valued at over $10 billion, in 2021 after a financing round led by Alkeon Capital. However, the economic downturn has hit the tech industry hard, leading investors to adopt a more cautious approach when it comes to inflationary private market valuations. With economic conditions worsening, demand for Carta’s services has also softened according to Wall Street analysts tracking the space.

The large downvaluation comes as Carta looks to give existing shareholders and employees of the company the opportunity to sell their shares prior to a potential IPO. Such secondary transactions allow early investors to cash out part of their holdings, while also giving companies a benchmark of their current private market worth. For Carta, it seems the valuation music has stopped, with the large haircut reflecting the more sober situation in public markets amid rising interest rates.

Going forward, the downvaluation could impact Carta’s ability to attract future capital and acquire firms at high prices. However, company executives remain optimistic about the long term opportunity and stated they are focused on serving customers. The secondary sale is expected to close within the next quarter.