Controversy surrounds US-based startup Carta as it expands into the brokerage business, leading to accusations of breach of trust. The fallout includes a lack of trust in their cap table services and the decision to shut down the brokerage business to restore trust, potentially impacting Carta's valuation and reputation.
Carta faced controversy after being accused of breaching confidentiality while setting up a brokerage, raising concerns about privacy and data security.
Carta swiftly shut down its brokerage business to regain trust and focus on preserving its reputation.
Deep dives
Kata's Solution for Managing Startup Shares
Kata offered startups a platform to manage their capitalization table (cap table) by creating a digital dashboard. This platform helped track the ownership of shares and the associated restrictions, providing startups with an efficient and hassle-free way to manage their shares. By offering this service as a subscription-based software, Kata aimed to alleviate the burden of tracking and managing shares for startups.
Kata's Expansion into Brokerage and the Breach of Trust
Recognizing the lucrative nature of trading in private startup shares, Kata decided to set up a brokerage to connect buyers and sellers. However, this move raised concerns about a conflict of interest. Recently, a software startup CEO publicly accused Kata of breaching confidentiality by approaching one of their confidential investors for a potential share sale. This incident shed light on potential unethical outreach practices and raised doubts about the security and privacy of cap table data. In response to these concerns, Kata swiftly decided to shut down its brokerage business to redirect its focus on regaining trust and preserving its reputation.
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Controversy Surrounding a Startup Helping Startups Manage Shares
In today’s episode for 12th January 2023, we tell you about why US-based Carta, a startup that helps other startups manage their shares, has landed in controversy.
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