TLDR: Crisis at Carta: How Henry Ward’s Dream of a Nasdaq for Private Startups Died

Carta, a startup that streamlines the tracking of equity stakes for other startups, saw its sales triple in two years to $150 million in 2021. Co-founder Henry Ward had a vision to create a stock exchange for startups, which attracted investments totaling $1 billion and led to a valuation of $7.4 billion. However, the company’s ambitious goals, coupled with internal challenges and regulatory scrutiny, eventually led to a crisis that caused its dream of becoming a “Nasdaq for private markets” to die.

Key Points:

• Carta’s subscription software sales tripled in two years to $150 million in 2021.
• The company attracted $1 billion in investments and reached a valuation of $7.4 billion.

Carta co-founder Henry Ward had a vision to create a stock exchange for startups, which he called the “Nasdaq for private markets.” Inspired by the potential for growth in this market, investors including Andreessen Horowitz, Silver Lake, and Tiger Global Management poured money into the company. With a headcount of over 1,500, the company seemed on track to disrupt Wall Street and the financial world.

However, Carta faced internal challenges such as a lack of alignment among its leadership team, poor communication, and a lack of focus on sustainable business practices. The company’s ambitious goals and rapid expansion also attracted regulatory scrutiny, with the Securities and Exchange Commission launching an investigation. The investigation focused on whether Carta’s software counted as a transfer agent, which would subject it to more regulations.

The crisis at Carta eventually led to significant setbacks, with the company scrapping its plan to launch a stock exchange and experiencing executive departures. The company’s valuation also took a hit, dropping to $6.3 billion in December 2023.

This article highlights the rise and fall of Carta and the challenges it faced in realizing its ambitious vision. It serves as a cautionary tale for startups seeking to disrupt established industries and emphasizes the importance of strong leadership, effective communication, and regulatory compliance in achieving long-term success.