Qualified Small Business Stock (QSBS)

What’s new

Companies using Carta for 409A will now be additionally assessed for qualified small business eligibility at no extra cost to the company.

Certificates issued by a qualified small business as determined by Carta will have a "QSBS" tag in the product to indicate that the shares represent Qualified Small Business Stock (QSBS). The goal of these tags is help stakeholders make more informed selling decisions.

The IRC’s definition of a qualified small business is restrictive yet vague and open for interpretation at the edges, so potential holders of QSBS should consult their tax advisor before making decisions to sell and claiming the QSBS tax benefit.

How it works

Based on company-provided information during the valuations process, Carta will assess the following criteria for qualified small business eligibility:

  • Company's gross assets are $50M USD or less
  • Company is an active business
  • Company is a C-corp
  • Company does not operate in excluded industries

If a company is identified as a qualified small business, a new badge will appear in the 409A dashboard:

If a stakeholder receives a certificate from a qualified small business but hasn't yet met the 5 year holding period for QSBS, they'll see a "QSBS eligible" tag in their portfolio:

Drilling into the security, the stakeholder will see some additional information about the QSBS status of the certificate:

Stakeholders who have held shares issued by a qualified small business for 5 years will see a "QSBS" tag in their portfolio instead:

Additional Resources

For detailed information about QSBS in Carta, please refer to our QSBS support article.

Who this affects

Companies using Carta for 409A and their stakeholders.

Timing

  • Available now to 50 randomly selected 409A customers
  • General availability for all 409A customers coming in two weeks

Instant KYC for Non-Individual LPs Completing Subscription Documents

Non-individual Limited Partners who complete subscription documents on Carta can now be KYC’ed instantly.

What’s New

This release is a follow-up to our KYC for Individual LPs feature. If your fund leverages Carta’s KYC/AML service and you have non-individual Limited Partners (LPs) completing subscription documents in Carta, these LPs can now be instantly KYC’ed on the platform. Carta instantly KYCs the LP's control person and beneficial owner(s) in addition to the LP entity itself.

Carta’s instant KYC feature is made possible by Carta integrations with identity and verification databases like LexisNexis, Ekata, Socure, and more.


Limitations

  • For this release, only US-based LPs are supported for instant KYC. Future releases will extend support to non-US LPs


How it Works

  1. As an LP completes their subscription documents, non-individual LPs (for funds that avail of Carta’s KYC/AML service) will see a dedicated Know Your Customer section. Upon landing here, LPs will first be asked if their control person and beneficial owner(s) are all US persons - 





  2. If the control person and beneficial owner(s) are all US persons, then the LP will be shown forms to enter KYC information for these individual(s) -






  3. Finally, the LP is also able to upload any entity formation documents and photo IDs here:



  4. Once subscription documents are signed by the LP, the following are instantly KYC'ed: the LP entity, control person, and beneficial owner(s). If all pass KYC, this is immediately reflected in the Carta UI and General Partners are notified to countersign -


    Timing: Rolled out to all on Aug 31, 2021

    Audience: US-based Limited Partners, General Partners


VC Firm Access Update

What’s new

We're updating firm permissions to be more granular for larger firms, while keeping them easy to manage for emerging managers.

Fund Admin clients on Carta will now have the ability to grant users on their accounts access to only the information they need: Investments, Limited Partner information, Fund Admin, and Fund performance data.


How it works

Admins on a VC firm account have the ability to add users and update their permissions. Permissions are controlled under Settings on a firm account. Non-admins can go to the Settings page to see who the admin on their account is.

Basic VC firm accounts on Carta will be able to grant users Admin or Investments access.

Firms that use Carta for additional services have the ability to grant users additional permissions for each fund in the firm.

Permission

Grants access to

Admin

  • Add, update, or remove other users on the firm
  • Accept securities on behalf of the funds in the firm
  • Update payment information for the funds in the firm
  • Complete tender offers on behalf of funds in the firm
  • Use the portfolio merge tool

Investments

  • Company information for companies that fund has invested in
  • Schedule of investments

Partners

  • Access to partner information, including contact information, commitment amount, and parter documents
  • Access to fundraising and closings tools

Fund Admin

  • Access to fund administration information, including capital calls, distributions, and quarterly reports
  • Ability to communicate with fund admin team through Carta
  • Ability to request and approve fund admin updates

Fund Performance

  • Access to fund performance data

Audit

  • View only access to investments, partners, fund admin, and fund performance data
  • Users with audit access cannot have other access to the fund

Defaults

For each user, an Admin can grant them “default” access to the firm. Defaults will automatically give users these permissions for new funds that are added to the account.


Additional Resources


Who this affects

This update affects all VC firm users on Carta. Users will not see a difference to their existing access with this change, but going forward Admins can update permissions.


Timing

We are rolling this out to a small number of firms starting on August 30 and plan to roll out to all firms within a few weeks.

[Early Access] Live Chat Support

Carta now offers Live Chat Support to Early Access Users. 

Who does this affect?

Law firm users and companies in Carta Launch 

What’s new?

Users can now opt to chat live with a Support Agent, in addition to the traditional Phone and Email Support. 

They can simply access the Help Center by clicking on the dialog balloon at the bottom right of the screen, where the Live Agent option will be available. 


After accepting the terms and conditions, the user will be connected to a specialized Support Agent. 

This rollout builds upon Carta's investment in a modernized approach to how our customers receive assistance in-app, enabling easy access to multiple engagement types to fit the context of the question, including: 

  • Chat
  • Voice and video
  • Co-browse
  • Screen-sharing 

All within the Help Center in-app! 

Get Help!

Carta is making it easier to get the answers our users need, when they need them. Introducing our one-click Help Center.

Who does this affect?

Company administrators and viewers, law firm users, and personal portfolio holders

What’s new?

Users can now access Carta's Help Center in one click by going to the dialog balloon icon at bottom right of the screen, where they can ask questions about the platform's workflows, products and features.  

Carta's Natural Language Processing technology will find the most helpful Support Articles for that query within our knowledge base, and provide users with the right answer for their questions.

In the event a question needs to be escalated to a Support Agent, Carta users can also raise Support Cases without leaving the page, and they will have multiple support options available to fit their engagement preference.

Email Cases created through this workflow leverage user's session data and context to quickly route the Case to Subject Matter Experts, leading to faster resolution times. 

When Phone is selected as the preferred method, the most appropriate phone number is displayed based on the user's type and question, ensuring users get connected to the right Support Agent for their need, without inconvenient call transfers. 

Learn more about Carta's Help Center

New Carta Launch onboarding for early stage founders


What’s new?

Early stage founders can get self-onboard onto Carta Launch faster than ever before. Founders with up to $1M raised or 25 stakeholders or fewer can now create an account and onboard company data with ease, speed, and confidence for free.  

Carta Launch is live on Product Hunt! We'd so appreciate your upvote!

How it works

Sign up and create your account

  1. On carta.com/launch, click “Get Free Access” 
  2. Fill out a simple form with your company information to create your account.



Guided onboarding

  1. We designed the new onboarding experience to be friendly and guide you through each step



  1. With just Incorporation Documents and Common Stock Purchase Agreements, you can enter information about your Company, Founder Shares, and Users & Roles to complete your onboarding.
  2. Once you’ve reviewed and activated your account, you’re all set to get started on Carta.

  1. Your free Carta Launch plan is suited to fit your immediate fundraising and equity needs and set your company up for success as it scales.


Additional resources 

  • For step by step instructions for how to get started find our video guide here
  • For more information about what is included in Launch, check out this video or check out our most recent blog post. 
  • For any additional questions, please reach out to partners@carta.com or get help through our in-app support. 





Capital Calls on Mobile

General partners now have the ability to view and track capital calls from the Carta iOS app. Investment firms can now track the progress of on-going and completed calls along with investor details, on the go, straight from the Carta app.

Who this affects

  • Fund administration clients

Supported platforms

  • iOS (Android coming soon)

What's new

Fund Administration clients can now access their capital call details and investor information from the Carta app.

  • The home screen now provides a summary of active capital calls with the ability to view individual call details.
  • Navigating to a capital call allows you to view further call and investor details along with a full investor list which can be filtered by Paid and Unpaid calls.
  • The Fund Details page now also provides a capital summary and the ability to view a list of Active, Drafted, and Completed calls.


Instant KYC for LPs Completing Subscription Documents

Limited Partners completing subscription documents on Carta can now be KYC’ed instantly.


What’s New

If your fund leverages Carta’s KYC/AML service and you have Limited Partners (LPs) completing subscription documents in Carta, these LPs are now instantly KYC’ed on the platform. 

Carta’s new instant KYC feature is made possible by Carta integrations with identity and verification databases like LexisNexis, Ekata, Socure, and more.


Limitations

  • For this first release, only individual (as opposed to entity) LPs are KYC’ed. Future releases will support KYC for entity (non-individual) LPs as well. This includes KYC for the LP entity, LP control person, and LP beneficial owners
  • For this first release, only US-based LPs are supported. Future releases will extend support to non-US LPs


How it Works

  1. As an LP completes their subscription documents, individual LPs (for funds that avail of Carta’s KYC/AML service), will now see a dedicated Know Your Customer section. Here, LPs can input the additionally required information for KYC -


  2. Once subscription documents are signed by the LP, the LP is instantly KYC’ed. If the LP passes KYC, this is immediately reflected in Carta and General Partners are notified to countersign -


    Timing: Rolled out to Limited Partners on July 1, 2021


    Audience: Limited Partners, General Partners

Support Partially Realized Investments

This past week we released added granularity to the Investments, Overview and Firm Overview Tracking bars for investments. The in-app tracking bars will now show
  • Total investment count
  • Fully realized investment count
  • Partially realized investment count
  • Unrealized investment count


Timing: Rolled out to funds using our Fund Administration services on May 21, 2021.

Audience: General Partners, CFOs, Investment teams.

Partners' capital status included in exports

This past week we've added partners' capital status to the partners export. We know keeping tracking this is important for funds and can be a pain to do manually. Our Partners' exports on Carta now included the following information: 
  • Called capital
  • Uncalled capital
  • Percent of capital called
  • Prepaid balance
  • Outstanding balance

These updates apply to both the fund level and 'All Partners' export. We've added the following columns to the partners export.

Where to find: Log in to Carta > Select a fund within your investment firm > Navigate to the Partners tab > Select 'Export partners'


Timing: Rolled out to funds using our Fund Administration services on April 30, 2021.

Audience: General Partners, CFOs, Investment teams.

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