Carta's secondary market ambitions cause Twitter drama. But does it matter?

Alright, for those of you who are not chronically online, you probably missed that equity cap table management startup Carta was involved in some tech Twitter drama this weekend.

This ain’t SVB / OpenAI level drama but for tech nerds, this is our Super Bowl.

So first, a quick recap of the drama and then we’ll explain why this is really much ado about nothing.

• Karri Saarinen , CEO of Linear, revealed on Twitter that Carta reached out to his angel investors about selling their shares.
• The problem was that Carta did this without his/the company’s consent

Definitely not a good look.

Then Henry Ward , CEO and Co-founder of Carta, talked to Karri and tweeted out what folks in the comms industry would call a dumpster fire of a response.

And then Tech twitter got hot & bothered with calls to migrate off of Carta and the end of Carta.

The reality is that by tomorrow, we will be onto the next drama.

But in the spirit of bringing some data to this kerfuffle, we mined our interviews with Carta customers to see if there truly is trouble in paradise.

And there ain’t.??

I'll break down CSAT and renewal intent data from CB Insights software buyer interview transcripts to illustrate.

First, I'm not talking about Carta's $7.4B valuation and whether the company will grow into that.?That's certainly a fair question and worthy of its own analysis.

I'm also not saying the company's practices or very unconventional and bizarre comms strategy are good.

I'm just talking about what its customers are saying about their equity cap table management solution and the real risk of a mass migration off of Carta.

First, here's the summary of what CBI's buyer transcripts highlight:

• Average CSAT score: 8.67 (scale of 1-10)
• Average intent to renew: 89.2%

These are really strong numbers.

So what are folks saying about Carta and the competition including 摩根士丹利 Shareworks or Pulley ?

Note: AngelList or Fidelity Private Shares did not come up as a solution in our interviews.

The most frequent sentiment we observe in mining our buyer transcripts is that Carta is viewed as the standard for equity cap table management for startups (as evidenced below).

The reality as this quote highlights is that there are switching costs here.

And so, switching cuz of some Twitter beef is easier said than done.

And most startups, even if they dislike Carta's practices & comms, probably don't want to deal with the brain damage of migrating away.

But it goes beyond the challenges of migrating away.

Customers like Carta's capabilities.?

This customer evaluated Pulley as well and found Carta superior as they highlight below.

This customer evaluated Morgan Stanley Shareworks and found it to be too much for their needs at the early stage.

The only sentiment we heard about gaps of Carta came from later-stage, mature companies who talked about migrating off of Carta prior to an IPO.

If you are a CB Insights customer and want to read these transcripts, you can see them here.

And on a related note, my 2024 M&A prediction is that Rippling acquires Carta competitor Pulley.?

Here’s why.?

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