Home Startups Carta lays off 10% as CTO lawsuit looms • businessroundups.org

Carta lays off 10% as CTO lawsuit looms • businessroundups.org

by Ana Lopez
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Carta, an equity management platform last privately valued at $7.4 billion, has cut 10% of its staff, confirming previous rumors that a workforce cut was in the works. Using LinkedIn data, the layoff could have affected about 200 employees.

Today’s layoffs are about the same size as the 2020 workforce reduction, an event that CEO Henry Ward then partially attributed to a decline in new customers given the impact of the coronavirus on business. Years later, Ward strikes the same tone.

In an email sent to staff today, obtained by businessroundups.org, the CEO said that “when our customers suffer, so do we. And right now, the entire tech and venture ecosystem is suffering.” The company claims it cut travel costs, supplier spend, marketing spend and investment in new bets, but ultimately had to reduce headcount.

Severance benefits include a 2.5 month severance payment with an additional week of severance pay per year of service completed and comprehensive mental health care. For those relying on Carta for a visa, a 30 minute consultation with the immigration attorney. Those not affected by the layoff have the option of resigning voluntarily, with the option of severance pay.

The well-funded company is dealing with more than just the macroeconomic conditions that have led to thousands of tech companies laying off workers.

As businessroundups.org reported earlier today, Carta is suing its former CTO, Jerry Talton, who the company says was fired “for good reason” nearly three weeks ago, on Dec. 23. In Carta’s lawsuitthe company refers to Talton’s “wrongful and illegal acts as a Carta executive,” including discrimination and sexual harassment of at least nine women, a Carta spokesperson said.

It doesn’t help that several users of Carta’s services, which range from dressing table management to fund administration, have been less than impressed with the platform in recent months. businessroundups.org spoke to a fund manager who left the platform and claimed his team had four different account managers on contracts for less than two years, which “certainly didn’t help with the continuity and understanding of our fund and our needs.”

According to Crunchbase data, Carta has raised $1.1 billion from venture capital investors, most recently including a $500 million Series G from Silver Lake. Other investors in Carta include Andreessen Horowitz and Lightspeed Venture Partners.

Significant corporate support, as this declining market reminds us time and time again, is not necessarily a competitive advantage. Carta, embroiled in previous lawsuits and now facing a current challenge, has thus perhaps unsurprisingly attracted a lot of competition in recent years.

Its closest competitor, AngelList Venture, has raised dramatically less capital, about $200 million. When businessroundups.org asked AngelList Venture CEO Avlok Kohli about recent product changes that put it in competition with Carta, he shrugged and added that he had nothing new to add. “Eventually there will be a small number of people who are actually capable of building a calculated product,” Kohli said in a previous interview. “When I say ability, I don’t mean technical ability, but the institutional knowledge to build something.”

The difficulty of building a business in the venture services landscape was only further proven by the recent closure of Assure, a fintech company that helped investors issue special purpose vehicles. According to Axios, Assure has not given investors any reason for the closure other than the following statement: “The industry has evolved significantly over the past ten years since we established our company. The current market conditions have led Assure to evaluate its business model.”

Let’s see if the evolution of the industry, both with more competition and graveyard companies, is a dynamic that Carta can keep up with.

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