Cap table management Startup Carta has been dealing with a PR nightmare for the past couple of days. To be clear, this is not Carta’s first public scandal, but this new one seems to have caused more buzz because it directly affected its customers.
so what happened? In short, a sales employee, according to Carta, used confidential data from one of the company’s clients to formulate a sales pitch for a secondary stock sale. This act was a clear violation of Carta’s ethics and customer data privacy. The company initially paused secondary trading, then last night said it would close that business completely.
The problem, according to Carta, has been solved. But the company’s clients — investors and startups — may not like a provider holding some of their most sensitive data to have such a blatant ethics and privacy breach at a provider.
Before we delve into what this chaos might portend for Carta, we need to understand the situation at the company before this comes to light. Henry Ward, co-founder and CEO of Carta, said in a… Medium share On Monday night, Carta’s annual recurring revenue reached $373 million, with just $3 million of that coming from secondary sales. The company’s last seed round was raised in 2021 at a valuation of $7.4 billion.
Although Carta has not raised a round since that 2021-era deal, according to secondary data from platforms like Hiive Markets, Caplight, and Notion, its current valuation is estimated at about half of its most recent seed round.
Now, that’s not a bad thing when you compare this valuation with current valuation trends for late-stage startups. My colleagues Alex Wilhelm and Anna Heim also wrote on Tuesday morning that the company’s growth over the past few years has been promising, even without its secondary markets business.