The usual reason to hire a person or company is that they’ve skills and resources unavailable within your own organisation. This is as true of hiring a janitorial services company as it is a financial expert. But we’d rather expect a janitor one to know the business end of a mop. Which leads us to ponder whether we’d ever hire Carta given this performance by their CEO.
Do note what the company claims to be able to do. Aid people in working out how best to manage equity and equity holdings so as to benefit the growth of the company:
By Henry Ward, CEO of Carta, a company that helps private and public companies, investors and employees manage equity and ownership.
OK, rather specialised services but why not? Smith and Ricardo were right about the division of labour, specialisation and the trade in the resultant production after all. It’s just, well, what’s the right end of a mop?
Carta data from more than 6,000 primary financing rounds raised by 4,500 U.S.-based, venture-backed companies over the last four years show that more money was raised per round in 2018 than in 2017. Valuations increased at all stages of a company’s lifecycle, and Series D valuations (which are given to later-stage companies) increased by a whopping 128 percent. Moreover, when these later-stage companies raised money in 2018, they gave away less of the company despite receiving record-high valuations.
What’s that despite doing there? It should, of course, be because.
Think what a company is doing when it gains a financing round. It’s selling part of the company for money. It’s selling x% of the company for $y that is. So, the company has a high valuation. They have to sell x% minus a bit to gain $y as compared to a lowly valued company which has to sell x% plus a bit to gain that same $y. We can run it the other way around too. $y buys x% plus of a lowly valued company and x% minus of a highly valued one. This is what we mean by highly valued, it’s more expensive, it costs more $ to buy some set portion of it. The company can raise more $ by selling a set percentage of itself.
Thus it’s not they gave away less of the company despite receiving record-high valuations it’s they gave away less of the company because they received record-high valuations.
Right, so this is the CEO of this specialist company touting for business. You going to hire them on this showing? Me neither. He’s not showing he knows how to grip the right end of the mop, is he?