Carta Exits Secondary Trading Business Amidst Breach of Trust Controversy

Carta Exits Secondary Trading Business Amidst Breach of Trust Controversy

Startup Carta makes a swift decision to prioritize trust and exit the secondary trading business after a prominent customer accuses them of misusing confidential information.

In a surprising turn of events, Carta, a 14-year-old startup that initially focused on cap table management software, has announced its exit from the secondary trading business. The decision comes after a high-profile customer accused the company of using confidential information without consent, leading to a breach of trust. Carta’s co-founder and CEO, Henry Ward, acknowledged the concerns raised by the customer and emphasized the company’s commitment to prioritizing trust in its operations. This development has significant implications for Carta, which had aimed to become the go-to platform for private stock transactions worldwide.

The Rise and Evolution of Carta

Carta started as a cap table management software provider, offering solutions to help companies manage their ownership structures. Over time, the company expanded its services and developed into a “private stock market for companies.” Leveraging its extensive network of companies and investors, Carta aimed to become the central hub for all private stock transactions globally. This strategic shift increased Carta’s value in the eyes of its venture backers, highlighting the need for the company to scale.

The Breach of Trust Controversy

The controversy surrounding Carta erupted when a Finnish CEO, Karri Saarinen, publicly accused the company of using information about his company’s investor base to sell shares to outside buyers without consent. Saarinen expressed disappointment in Carta, a company he trusted to manage his company’s cap table, for engaging in cold outreach to his angel investors. His post on LinkedIn sparked a public discussion, with other founders sharing similar experiences of Carta representatives contacting their investors without their knowledge.

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In response, Henry Ward publicly apologized to Saarinen, attributing the incident to a rogue employee who violated internal procedures. However, Saarinen’s revelations prompted several founders to consider moving their business away from Carta, raising concerns about the company’s trustworthiness.

Prioritizing Trust and Exiting Secondary Trading

In a recent Medium post, Ward announced Carta’s decision to exit the secondary trading business. Ward acknowledged that the revenue generated from secondary trading was minimal compared to Carta’s other business offerings, including cap table management, fund administration, and private equity services. He also admitted that Carta had struggled to execute its ideas around liquidity and secondary trading effectively.

Ward emphasized the importance of trust in the private company ecosystem and acknowledged that having exclusive customer data was not an advantage if it undermined trust. He expressed humility, stating that he might not be the entrepreneur capable of solving the liquidity problem and that Carta might not be the company suited to address it. Ward emphasized that Carta had never released a data product, as the data belonged to their customers and not to Carta itself.


Carta’s swift decision to exit the secondary trading business reflects the company’s commitment to rebuilding trust with its customers. The controversy surrounding the breach of trust has put Carta’s reputation at stake, with founders expressing concerns about the company’s handling of confidential information. The impact of this move on Carta’s valuation remains uncertain. However, the incident serves as a reminder of the importance of maintaining trust and transparency in the rapidly evolving landscape of private stock transactions.

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