• See an overview of all their entities’ high-level metrics 
• Search & navigate to any of their entities
• Access fund detail pages like Fund Performance, Partners, and Investments
• Filter and sort their entities

What's New

We simplified the experience for returning LPs filling out subscription documents in Carta’s Closings Tool. With most of their information pre-filled, LPs can fill any remaining info & sign subscription documents with just a few clicks. 

How it Works

When returning LPs are prompted to fill out subscription documents, we will pre-fill their documents if they’re investing with the same entity or individual they’ve previously filled out subscription documents for. This is especially useful for LPs that have investments on Carta both as an individual and through multiple entities like trusts or LLCs.

This is a big win for fund managers that are launching multiple funds or SPVs with the same LP base that are looking for a streamlined experience for their LPs. 

Who this affects

This is now available to any LPs using Carta's Closings Tool. The Closings Tool gives LPs a quick and easy way to fill out Fund and SPV subscription documents. 

Private market issuers that go-live on or after 11/09/2021 can now track updates to company share classes’ rights and preferences as they are changed over time. This feature will roll out to other issuers in the next few weeks.

Users with the Legal administrator permissions will be able to make changes to the share class details. Users with the Company editor or Company viewer permissions will only be able to view the share class details.

Experience Overview

1. Navigate to Securities > Shares.
   
   
2. Click Manage share classes and select Create/edit share classes.
   
   
3. The in-app spreadsheet loads in view-only mode, to prevent accidental input, which is indicated by the grey rows.
   
   
4. Create a new share class by clicking on the related button on the top-right of the screen.
   
   
    

5. To make edits to the share class details, click the Edit to the right of the AOI version date and name. If editing from the active AOI version, Admins will have the ability to reflect both a clerical error or amendment
   

   
   1. If you are editing a past AOI version, Admins will only be able to make edits because of a clerical error.
      
      
   2. If reflecting an amendment, Admins will be able to upload the related Articles of Incorporation (AOI) or select one from the Library page. In addition, a name can be added to the AOI version.
      
      
   3. Click Continue to save.
      
      
6. At this point, the Admin can make changes in the spreadsheet. The side-panel will expand to show helpful content related to the selected cell.
   Cells that are painted light gray cannot be edited because the data may be in-use, a calculated value, or not applicable. Respectively, examples include share class names, the calculated outstanding value, and conversion price for common shares. Reference your AOI or contact your legal partner if you need help filling out this spreadsheet.
   
   
7. After edits have been completed, click Finish editing and save.
   
   

Carta will check your entries for any errors and provide actionable messaging to help you make corrections.

1. Review the summary of changes, then click Confirm and save. No email notifications are sent due to the changes.
   
   

2. Admins can navigate between AOI versions with the AOI version selector, which will show the filing date and version name as dropdown options.

   

   
   

Carta will be making improvements to tracking the company’s cap table, financing history, and reporting in the next few months to incorporate time-versioned share class information.

Have questions? Read about FAQs in our support article.

What's new?

Portfolio companies can now share financial and cap table information with their Investors when their 409A valuation is complete. If you've been shared this data, you can view and download it directly from your Carta account.

How does it work?

When your portfolio company accepts their Carta 409A valuation, we ask them if they want to share some of the data used in the valuation with their Investors to help their investors stay up to date on the company's financial situation and to help streamline some of the jobs needed to be done on the Investors side, such as the ASC 820 valuation. 

The portfolio company will select which Investors to share the data with: 

If you were one of those Investors that was shared the 409A data, you will then receive an email notifying you of the new document that has been shared and will be able to see it in your Documents tab under that portfolio company in Carta!

What information will be shared?

Historical financials

Information about the company's last twelve month revenue and EBITDA (earnings before interest, taxes, depreciation, and amortization) as well as the previous twelve months revenue and EBITDA. Since the 409A valuation is a valuation of the company at a point in time, the data used is as of a specific date. For example, Meetly conducted their 409A valuation as of 03/01/2019 (this is their valuation date). For the historical financials, the company provided the last twelve months (03/01/2018-2/28/2019) and the previous last twelve months (03/01/2017-02/28/2018).

Summary financial forecast

In addition to their historical financials, the company will also share the projected next twelve month's revenue and EBITDA. Using the same example above, this would mean Meetly has shared 03/01/2019-02/29/2020 financial projections for revenue and EBITDA.

Cash and Debt

The company will also share the cash and debt balances as of their valuation date. In the example above, this would mean Meetly has shared their cash and debt balances as of 03/01/2019.

Summary level ownership information

Some cap table information will also be made available, which includes access to share class level information but will not contain any information about share holders. Here's what you'll see as an investor: 

Industry sector

Information about what industry the company operates in will also be shared. This is the industry information that was used to conduct the 409A valuation and may represent the current industry the company operates in. At Carta, we have preset industry lists that are used the 409A valuation. Should "N/A" appear next to industry sector for your shared data, it means the 409A valuation used a custom industry set and this information will not be made available.

 Time to exit

This represents the number of years until the company expects to have an exit event. 409A valuations are capped at 5 years for the time to exit so keep this in mind when reviewing this estimated exit term.

What information will NOT be shared with me?

This document will not contain any information about the concluded FMV, latest preferred price, any rights & preferences the preferred share holders have, strike prices or purchase prices, and any information about a specific shareholder.

Is this available to me?

The feature is available to any investor that has been shared the 409A valuation data. If you aren't seeing a document in your account, it may be that your portfolio companies either have not received a new 409A valuation since the feature has been released or have not shared the data with you yet. 

What's New

We launched a new LP tracker in our Closings Tool so fund managers can easily track the status of each LP filling out subscription documents. We clearly show exactly where the LP is in the process and provide instructions for what each LP needs to do to progress and finish their subscription.

How it Works

In the Closings Tab of the entity you’re fundraising for, you’ll see one these six statuses assigned to each LP: 

• Prospect: LP has been added but the fund manager has not invited them to fill out documents yet. 
• Invited: LP has been invited to Carta but has not started filling out their documents.
• In progress: Investor has started to complete documents.
• Investor Signature Pending: Investor has completed documents and requires two or more signatories. Not all signatories have signed yet.
• Submitted: Investor documents are ready for review.
• Countersigned: Documents are complete and the investor has been admitted to the fund.

To get more detail about the specific LP, you can click on each status and get more detailed information about the LPs status such as: 

• If they are using the help of someone else such as a wealth manager to fill out documents
• Who still needs to sign if there were multiple signatories designated by the LP
• What actions does the LP need to take to complete their subscription
• Timeline of the LPs interactions with the closings process

Additionally from this modal you can manage LP access to your fundraising data room and see who has been interacting with the information in each data room. 

Additional Resources

Check out that walks through the step-by-step process of adding LPs to the closings tool. 

Is this available to me? 

This is now available to any fund managers using Carta's Closings Tool. The Closings Tool gives LPs a quick and easy way to fill out Fund and SPV subscription documents.

What’s new

Companies can now adjust taxes for option exercises previously approved in Carta.

Legal administrators can navigate to the Exercises ledger (Transactions > Exercises) and select "Adjust taxes" within a ledger row dropdown to find the new tool:

How it works

The "Adjust taxes" tool will not be available for option exercises in the "Requested" status since option exercise approvers can adjust taxes as part of the exercise approval workflow.

For ACH option exercises already approved by the company or for company-entered manual exercises, the "Adjust taxes" tool will be available for use.

After a legal administrator selects "Adjust taxes" from the Exercises ledger, they'll see the following modal:

The legal administrator will be asked to provide a reason for the adjustment. Next, the following actions are available:

• Un-check a box next to a tax type to remove it from the option exercise
• Re-check a box to re-add a previously removed tax type to the option exercise
• Update the specific tax withholding amount in the "Adjusted" column
• Select "Add another tax type" to add a new tax type to the option exercise

Note that new tax types can't be added from this modal. If you'd like to add a new tax type to the exercise, add it first in the Tax rules page (Compliance > Tax rules) and then come back to the "Adjust taxes" tool to add it to the option exercise.

Once the adjustment has been saved, both the company and the stakeholder will see a blue banner when viewing the option grant. The banner contains information about the newly adjusted tax amount and exercise cost in addition to when the adjustment was entered in Carta:

Adjusted tax amounts will also be reflected in the "Exercised and settled report" and the "Tax withholding report" (Capitalization > Reporting).

For more information, check out the support article for the new "Adjust taxes" tool: https://support.carta.com/s/article/adjust-taxes-option-exercises

Who this affects

Private and public companies that issue option grants.

Timing

Available to all companies now.

• Managing option exercising is now easier than ever. 

International optionholders of US companies can now exercise online via wire transfer to Carta. As a result, all US companies can now settle exercises through Carta, for both ACH and wire transfers payments. Carta conveniently manages payment reconciliation and payment issues such as insufficient funds or overpayments. This new feature is controlled via the new Transaction Settings page. 

Who this affects:

• 🇺🇸 US companies, public and private

What's new:

• 💸 All exercises are settled with Carta - company admins will no longer need to mark exercises as paid. No matter where optionholdersers are located, Carta will receive funding for on-platform exercises - US holders pay for their exercise via ACH and non-US holders pay for their exercise via a wire transfer to Carta.
• ⚙️ Clear transaction settings - company admins control option grant exercisability easily in one central location within Transaction Settings, under Company Settings.
• ❌ Auto-cancel unpaid exercises - A wire exercise is automatically cancelled if unfunded or underfunded for 30 days after admin approval.
• ✉️Communication with optionholders - Carta communicates directly with optionholders to resolve payment issues, letting them know of an outstanding balance for an exercise or facilitating a refund for overpayment. 

Action required: 

• Configuring Transaction Settings will enable access to online wire exercises for international optionholders.
• Navigate into Company > Settings > Transaction Settings 
• Click Set up to accept the terms and reconfigure your company account
• Accept the terms and conditions and enjoy the feature! You will be able to:
  • Change the bank account information
  • Easily turn exercises ON and OFF, without Support intervention
  • Select the types of securities that may be electronically exercised

Timing:

• Rollout begins Oct 14, 2021
• Rollout to reach 100% of all customers by the end of 2021

What if the company decides not to enable the tool?

The current company or transaction settings will not be impacted. Remember that enabling Transaction Settings is required for international optionholders to submit online wire exercises!

Resources: 

• [Support Article] Enabling online transactions
• [Release notes] Exercising as non-US optionholder

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

Whats New

We've made it easier to quickly add LPs to Carta's Closings tool. Using a new spreadsheet in Carta you can now easily input details about each LP or simply paste information from another spreadsheet or tool. 

How it Works

There's a new "Bulk add partners" button on the closings tool that will open up the new spreadsheet where you can add LPs. You'll need to fill in the following information about each LP: 

• Partner name: The name of the individual or entity that is subscribing.
• First and Last Name: This will be the name of the primary contact for the LPs commitment. The LP can always update this and add additional contacts when they’re filling out subscription documents.
• Email: The email address of the individual who will be filling out subscription documents for the partner.
• Commitment amount: The amount the LP will be committing to the fund or SPV. You must enter a commitment amount but this can be updated at any point prior to the LP signing. 

Additional Resources

Here's a support article that walks through the step-by-step process of adding LPs to the closings tool. 

Who this affects

This is now available to any fund managers using Carta's Closings Tool. Our Closings Tool gives LPs a quick and easy way to fill out Fund and SPV subscription documents. 

What’s new

Legal administrators in Carta can now partially cancel an option grant in Carta. Partially canceling an option grant will reduce the number of outstanding shares and return the shares back to the option pool.

How it works

You'll find the partial cancellation tool by navigating Securities > Equity awards and clicking on the ledger dropdown for the specific option you'd like to partially cancel:

First, you'll be asked to provide an effective date for the partial cancellation. A partial cancellation is an amendment to the option grant, and the effective date will determine when the amendment takes effect in the company's as-of date reporting.

Next, select the cancellation method, which determines how the partial cancellation will affect the vesting schedule for the option grant. Because a partial cancellation reduces the outstanding quantity of the option, Carta needs to know from which tranches the shares should be canceled.

Last in, first out cancellation method

For some situations, the issuer or their legal counsel may not specify the way in which the amendment will affect the vesting schedule. Issuers can select the last in, first out cancellation for the vesting schedule, and Carta will cancel shares starting from the future-most tranche and move up the vesting schedule until the specified quantity has been canceled.

Custom cancellation method

For situations in which the issuer or their legal counsel want to affect the vesting schedule in a specific manner with a partial cancellation, issuers can select the "Custom" share allocation method - this approach provides flexibility and allows the issuer to cancel shares from any tranche. The in-app spreadsheet allows legal administrators to first reflect the partial cancellation in a spreadsheet application outside of Carta and then copy/paste the resulting vesting tranches back into Carta.

After selecting "Review and confirm" at the bottom of the page, verify the cancellation quantity and other information to save the partial cancellation.

Additional Resources

For more information around the limitations and best practices for the partial cancellation tool, please refer to this support article.

Who this affects

The new partial cancellation tool is available to the legal administrators in all of Carta's private market customers.

Timing

Available now.