US fintech Carta exits secondary market business after sales controversy
Carta Inc., a fintech firm that works with startups, is getting out of the stock sale business following a controversy over its use of customer data.
In a blog post Monday night, Carta chief executive officer Henry Ward said the company will stop its work in secondary share trading, a business it was pushing into alongside its service managing startups’ investor information, or cap tables.
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Offering CollegeCourseWebsiteIndian School of BusinessISB Digital TransformationVisitIIM LucknowIIML Executive Programme in FinTech, Banking & Applied Risk ManagementVisitIndian School of BusinessISB Professional Certificate in Product ManagementVisitThe company faced backlash over the weekend for combining the two businesses. On Friday, startup CEO Karri Saarinen accused Carta of using its cap table data to approach one of its investors about selling shares — an issue Carta described as an “internal policy violation.” In a blog post over the weekend, Ward apologized for the breach of trust and said that it had affected three companies. In posts on X, Saarinen and other customers, including the CEO of AI startup Hugging Face, said the issue was more widespread.
In his post on Monday, Ward said that the bulk of the company’s revenue, about $250 million a year, came from its cap table business and that secondary market trading only generated $3 million a year. “We have done a decent job at building the captable business,” Ward wrote, “and an abysmal job at the secondary business.” He added: “It is my greatest failure and disappointment.”
Ward said that the company would prioritize keeping data private. “It is our customers’ data, not ours,” he wrote. Axios earlier reported news
