Valuation Updates for SAFEs and Convertible Notes In-App

What's new?

Valuation Updates: Easily mark up or down SAFEs or convertible notes!

What’s important or valuable about this change? 

We've expanded the capabilities of our valuation update flows to enable clients, where appropriate, to mark up or down SAFEs or convertible notes. We created an addition to the flow which highlights audit and other considerations clients should have when marking up or down convertible assets, and given them the ability to complete this when applicable for their use case.

What do I need to do?

Check out a step by step guide on updating your valuations in-app here.

Here is a summary of how it works: 

  1. Login to Carta, navigate to investments, and click “Update Valuation”
  2. Add a new share price or holding value (the full value of your investment in the asset) for each investment you want to mark up/down
    1. Optional: submit any supporting documents like cap tables/purchase agreements
  3. Carta will check your input for accuracy and automatically post successful changes to your SOI, IRR, and financials. Otherwise, we will review the update first and reach out as needed.

As a reminder, here is a walkthrough of in-app valuation updates:

  1. Log into Carta and navigate to the fund with the investment that you want to update. 
  2. Go to the Investments tab on the top navigation bar and select the Update Valuation option in the top right side of the page. 
  3. Select the portfolio company (or companies) for which you want to update the asset values.

Note: Convertible assets are not able to be selected for marking up or down. For common questions about types of valuation updates, see this FAQ in the Valuations 101 support article, highlighted below,

  1. For each investment, specify the new price per share. For assets without shares, specify the new total holding value. You can observe the change in gain or loss based on the new value. 
    1. Value per share vs total holdings value: Assets that have shares can be marked up or down by share price, or by total value of the asset. These include preferred and common equity.
      Assets that do not have shares and change in value can be marked up by total holdings value. These include Partnership interest and membership interest. Reach out to your fund administrator if you have a specialty asset type and need assistance.
    2. Document support: Supporting documentation is strongly encouraged, but may be added later by emailing your fund administrator. Stock Purchase Agreement is preferred, however any documentation from the company that indicates the new value/value per share and is credible should be included otherwise for your FA to review. For unaudited funds, a screenshot of an email from the founder, for example, can also be provided for review, in absence of other documentation.
  2. Next, confirm which funds you want to apply this valuation update to. All funds in your firm that hold the portfolio company will be listed. In most cases, all funds should be selected. 
  3. You will repeat steps 4 and 5 for each portfolio investment you selected to update. 
  4. On the final review screen, confirm all the updates you made for each investment. Click Back to revise, or Submit if everything looks correct.
  5. After submitting, Carta will automatically check that the update is within reasonable range. If it passes, the changes will show immediately on the investment tab. If further review is required, a task will be generated for your fund administration team. If they need more information, they will reach out directly within 3-4 business days.  

Additional Resources:

FAQs for Updating Valuations