In the six years since we closed our Series A, Carta has become an integral part of the US venture ecosystem. What started as a platform for electronic shares has evolved into the financial infrastructure we are building for private asset management today. In 2014, we launched digital certificates and cap table management. In 2017, we rebranded from eShares to Carta, a name more accurately capturing our goal of mapping the private assets universe. In 2018, we began solving the fund administration problem for VCs, further bringing together the two sides of our marketplace: companies (issuers) and investors (buyers).
January 2021 marked two more major milestones for Carta. First, we launched CartaX, our solution for the pent-up demand for liquidity in the private markets in the US. Second, on the heels of an investment from Singapore-based global investor EDBI, we opened the Carta Singapore office, our first commercial operations in Asia.
We chose Singapore as the starting point for our journey for three reasons:
Trajectory. Venture capital is flowing into Southeast Asia at a record pace, and with this influx of capital, will come an increase in market complexity.
Ownership. Data on our platform suggests that employee ownership in a company in Asia is more than 40% lower than in the US,1 which means far too many employees are poised to miss out on the venture boom.
Liquidity. Southeast Asia has had very few exits. Tightening the value creation/return feedback loop, in tandem with making equity more commonplace among startups, both accelerates the rate of innovation and more evenly distributes the wealth to more people.
Record investment volumes are driving up complexity of deal terms and capital structures
Southeast Asia is one of the fastest-growing venture ecosystems in the world today. Venture investing in Southeast Asia is fueled by local government support, rise of talent, and the rapid digitization of the region. Record investment volumes from both regional and foreign investors have supercharged the rise of iconic tech companies (some of whom we are fortunate to call Carta customers).
But with more capital comes more challenges. As we have seen in the US, deal terms have become more difficult to track, and cap tables have become larger and more unwieldy. This complexity creates risks for even the most seasoned entrepreneurs and investors to navigate, let alone first-time founders and GPs. Founders have a difficult time managing their growing investor base and employee option plans; investors find it hard to systematically manage their portfolios and the reporting to LPs.
Carta is uniquely positioned to help manage these growing complexities. We’ve spent the last decade building tools for companies and investors to more efficiently manage equity-related activities across fundraising, round modeling, ESOP administration, corporate governance, investor relations, valuations, financial audits, and more. Working with more than 18,000 companies and investors has taught us how to handle everything from the most complicated financing terms to the most intricate ESOP setups.
Software creates structure, and structure allows for transparency. Transparency fosters knowledge, and with more knowledge comes more innovation. We are bringing the technology, data, and knowledge we have amassed in the US to Asia in order to empower the next generation of startups and investors in the region.
Low levels of ownership means employees are not fully participating in the venture boom they are helping to create
Equity is the most powerful tool for wealth creation and should be available to everyone.
We believe all employees should be able to participate in the rapid growth of the Southeast Asia venture ecosystem, not just founders and investors. Studies have shown equity to be one of the best compensation tools for long-term employee alignment and company performance.2 Equity is also the form of compensation that distributes company value across employeesat all levels, each of whom plays a role in creating the company’s value.
We have seen equity become a standard part of any compensation package for technology companies in the US. Though it’s changing, the ratio of equity compensation in Southeast Asia remains lower in comparison.3 This disparity stems from two factors: 1) lack of a standard system to manage private equity, and 2) lack of high-profile tech exits that showcase the potential for equity.
Carta makes issuing equity as easy as issuing payroll. For nearly a decade, our platform has helped companies and investors issue and track equity across the venture value chain, and employees hold and exercise ESOP with ease. We aspire to create more owners in Southeast Asia by arming those in the network with knowledge of why equity matters and systems to issue it.
Investors and employees need liquidity, but there are few ways to get to an exit
Despite venture capital pouring in and new companies forming faster than ever, exit paths in Southeast Asia are often elusive. IPOs have been rare. Many startups simply are not yet mature enough. M&A activity is also capped, as there are only a few tech unicorns in the region that could serve as acquirers.
With the first wave of institutional venture funds nearing the end of their fund lives starting this year, the pressure valve for exits has been steadily building steam. With IPOs and M&As few and far between, secondaries have been an important part of the Southeast Asia ecosystem to keep returns flowing.
Conventional tender offers are good for investors but bad for employees. Secondaries that aren’t company-sponsored are bad for both sides. Sellers are unable to find the right buyers, and therefore are often forced to sell at a discount. Buyers have no way of doing diligence on the shares they are buying, which means they’re unable to verify the rights and preferences, let alone the true price they should be paying.
With the deluge of capital flowing into the private markets, companies around the world have access to ample runway. As companies are staying private longer, venture markets around the world need a mechanism that allows for discovery between buyers and sellers, transacting on symmetrical information. Southeast Asia is in the prime moment for an organized liquidity platform to distribute value back into the ecosystem.
Carta in Singapore
We’re launching in Southeast Asia with two of our flagship products: cap table/ESOP software and our tech-enabled fund admin service. With EDBI’s strong financial support and deep regional network, we are building the infrastructure backbone for the venture market by helping founders and employees better manage their equity, and we’re supercharging investors by streamlining their back office fund operations.
It’s an exciting time to be in Southeast Asia if you’re building or investing in technology companies, and we’re excited to be a part of it. Our success depends upon our ability to support the entire local venture ecosystem, including founders, employees, investors, and network partners.
We’ve assembled a team of local venture talent and Carta veterans to form our team in Singapore. Our team would love to talk with you if you are:
A founder looking to fundraise: Nearly every VC in the US knows Carta, and our reputation in other regions is growing quickly. Our tools will help you go into the fundraising process with the confidence that your records are clean, while signaling to your investors you take your ownership seriously. Best part is, it’s 100% free for you until you close your Series A.4
A VC fund looking to upgrade your fund operations:Our fund admin team has 25+ years of experience and can take care of everything you need for your middle/back office. Our tech-enabled solution gives you the best of both worlds, with best-in-class product and service.
An accelerator or incubator:Most accelerators are managing their portfolio in spreadsheets. With Carta, you can consolidate your holdings into a single place. We can also help set up your companies for success with the tools, data, and know-how to help them close their next round.
Law firms, corporate secretaries, auditors, and accountants:Create more leverage for your team so you can spend more energy on strategic work that will actually help to strengthen the relationship between you and your clients.
Looking to solve complex financial problems on a global scale. We’re hiring.
Get in touch with us at email@example.com.
1Based on Carta data comparing median employee option plan size as a percentage of fully diluted share count.
3Based on Carta data comparing median employee option plan size as a percentage of fully diluted share count.
4Terms and conditions apply.
DISCLOSURE: This communication is on behalf of eShares Inc., d/b/a Carta, Inc. (“Carta”). This communication is not to be construed as legal, financial, accounting or tax advice and is for informational purposes only. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein. This post contains links to articles or other information that may be contained on third-party websites. The inclusion of any hyperlink is not and does not imply any endorsement, approval, investigation, or verification by Carta, and Carta does not endorse or accept responsibility for the content, or the use, of such third-party websites. Carta assumes no liability for any inaccuracies, errors or omissions in or from any data or other information provided on such third-party websites.