Carta Problems

Carta, a once prominent fintech company known for its cap table management and valuation services, has come under scrutiny due to a series of controversies and legal challenges. The company has faced multiple allegations, including toxic workplace culture, unethical business practices, and significant leadership issues. This article provides a summary of these alleged problems from credible media outlets and other forums. We recommend that you do your own research and form your own opinion.

As a result of extensive negative feedback, we do not recommend that startups or funds work with Carta. Read about 8 areas of accusations, allegations, and other events from various reputable media outlets below:

1. Toxic Culture

Reports describe a toxic work environment at Carta, with allegations of sexual harassment, indecent exposure at company events, and a "boys' club" culture. Several lawsuits have been filed by former employees who claim wrongful termination after raising concerns about these issues.

• https://sfstandard.com/2023/10/25/carta-san-francisco-lawsuits-insider-fortune-reports/

• https://www.aol.com/finance/inside-mounting-litigation-high-turnover-115001918.html

• https://emilykramer.medium.com/equity-for-all-1ae9ac42679e

2. Unethical Sales

Carta has been accused of unethical practices, including unauthorized solicitation of secondary sales from investors without permission and running a “boiler room” sales organization. These actions allegedly breached client trust and data privacy, leading to public backlash from several startup founders and fund managers.

• https://techcrunch.com/2024/01/07/carta-the-cap-table-management-outfit-is-accused-of-unethical-tactics-by-a-customer-after-it-tries-broker-a-deal-for-a-startups-shares-without-consent/ 

• https://www.fastcompany.com/91006942/carta-fintech-ethics-breach-venture-capital-svb

3. Violating Confidential Information

Allegations have emerged that Carta misused confidential client data for its own benefit, specifically in the context of secondary market transactions. Carta is alleged to have accessed both private investor and limited partner data of clients for sales. This has raised serious concerns about the company’s data privacy practices.

• https://fortune.com/2024/01/07/carta-henry-ward-investigating-allegations-confidential-information/ (https://archive.ph/obCq7)

• https://thehustle.co/the-carta-debacle-explained

4. Legal Battles

The company is embroiled in multiple lawsuits, including cases involving gender discrimination and retaliation against whistleblowers. These legal challenges have significantly impacted Carta's reputation and operations, raising questions about its corporate governance and ethical standards.

• https://www.businessinsider.com/carta-lawsuits-employees-ceo-retaliation-2023-2

• https://finance.yahoo.com/news/unicorn-carta-sees-lawsuits-stack-185454074.html

5. High Turnover

Carta has experienced a notable exodus of talent, with frequent layoffs and departures of key executives. This high turnover rate has been linked to the company's internal issues and has contributed to organizational instability, potentially affecting its ability to maintain consistent service quality and innovation.

• https://techcrunch.com/2023/01/11/carta-lays-off-10-as-cto-lawsuit-looms/ 

• https://sfstandard.com/2023/11/10/carta-san-francisco-tech-layoffs/

6. Executive Misconduct

CEO Henry Ward has been described as a volatile leader, allegedly demanding loyalty and punishing those who voiced concerns. His leadership style has reportedly contributed to the company's ongoing struggles with internal dissent and public relations.

• https://www.businessinsider.com/fired-carta-cto-ceo-henry-ward-misdeeds-and-illegalities-2023-3 

• https://www.businessinsider.com/carta-startup-discrimination-harassment-boys-club-allegations-henry-ward-lawsuit-2023-10 (https://archive.ph/ol5m9)

• https://news.ycombinator.com/item?id=38897363

7. Credibility Crisis

Carta’s credibility has been under fire due to the combination of these legal challenges, ethical breaches, and public relations mishaps. There is a steady stream of negative news about the company over the last two years. The company's reputation in the venture capital ecosystem has been severely damaged.

• https://techcrunch.com/2024/01/08/after-taking-credibility-hit-carta-announces-it-is-exiting-the-secondaries-business-we-have-decided-to-prioritize-trust/ 

• https://www.axios.com/2024/01/08/carta-credibility-startup-founder-allegations

• https://www.axios.com/2023/10/26/carta-negative-press-email 

8. Volatile Business

Following the allegations, Carta announced its exit from the startup secondary trading market, admitting that the nature of their business may give the appearance of compromised ethics, further fueling criticism. In addition, the state of business lines, such as fund admin, are in question due to their loss leading status within the company.

• https://www.axios.com/2024/01/09/carta-unanswered-questions

• https://www.wsj.com/articles/carta-a-key-silicon-valley-player-for-startups-stumbles-prompting-customers-to-consider-competitors-89800bb8 (https://archive.ph/yhZmS)

• https://www.theinformation.com/articles/crisis-at-carta-how-henry-wards-dream-of-a-nasdaq-for-private-startups-died

Conclusion

The alleged challenges faced by Carta highlight significant issues within its corporate culture and business practices. The combination of legal battles, ethical concerns, and public relations missteps has impacted the company’s reputation.

As a result of extended negative feedback, we do not recommend that startups or funds work with Carta.