Carta Halts Its Secondary Markets Product Amidst Controversy

Carta, a company once aspired to become the 'Nasdaq for private markets', has recently ceased operations of its secondary trading platform due to concerns over customer data misuse. The CEO, Henry Ward, referred to this as 'my greatest failure and disappointment' in a blog post. This decision marks a significant retreat from the ambitious goal of transforming equity transactions for startups. Carta, originally known as eShares, sought to revolutionize how private companies manage their equity and provide a marketplace for trading shares.

Despite big visions and substantial backing from investors like Andressen Horowitz, Carta has faced serious challenges. The platform's secondary market services, branded as Carta X since their 2020 introduction, were designed to facilitate the trading of startups' shares. However, a public accusation on LinkedIn over Carta’s inappropriate use of sensitive data for sales purposes sparked an uproar leading to its decline.

The company's broader growth strategy also included ventures such as acquiring Philadelphia Stock Transfer and providing equity management services. However, these initiatives did not last, hinting at operational hurdles that couldn’t be overcome. The end of Carta X, which only generated around $3 million in annual revenues compared to $250 million from its primary services, raises questions about Carta's future revenue streams and its ability to sustain its high valuation.

Beyond the platform's challenges, Carta as a company is also grappling with various legal issues, including lawsuits against former executives and allegations of workplace discrimination and abuse. These setbacks complicate the vision Henry Ward had for the company, making the future of Carta uncertain in the evolving landscape of private market trading.

Carta, failure, data-misuse