Carta CEO urges policies to promote private capital in Congressional hearing

Henry Ward outlined how startups and private funds drive American innovation and advocated for expanding opportunities for entrepreneurs and investors.

Key points in Ward’s hearing testimony:

• Startups and growth-stage companies backed by private capital are responsible for the bulk of net new jobs created in the United States.

• Of all initial public offerings since 1980, 40% were VC-backed companies; 13% were PE-backed companies.

• 92% of R&D investment comes from public and private companies that were initially backed by private capital.

• America has driven every major technological innovation in the past 50 years and has started twice as many companies as the rest of the G7 countries combined. This would not be possible without private capital.

Written testimony of Henry Ward to U.S. House Committee on Financial Services, December 4, 2024

Chairman McHenry, Ranking Member Waters, and members of the Committee, thank you for the opportunity to appear before you today as an advocate for the innovation economy and the private capital that fuels it.

My name is Henry Ward, and I am the CEO and co-founder of Carta—a privately held financial technology company that forms the infrastructure of the private capital ecosystem.

Startups, growth-stage companies, and the funds that back them create jobs, expand economic opportunity and growth, drive innovation, and ensure our nation’s competitive advantage. Put simply, the private capital ecosystem is America’s economic and innovation engine. Carta continues to invest in the infrastructure for private capital, and policy is part of that infrastructure.

We see these goals reflected in the work of Chairman McHenry, as well as many others on this Committee. He has been a champion for the innovation ecosystem, working on a bipartisan basis to advance efforts to expand investor access, broaden capital formation for startups and growth-stage businesses, and help the U.S. maintain its competitive and innovative edge.

That approach is what continues to be required today. Bold, forward-thinking policy is crucial in the effort to keep America at the forefront of global innovation. My testimony today will highlight how private capital enables companies to launch and grow, how its unique model drives our country’s growth, and how we can shape policy to broaden the reach of private capital to benefit more stakeholders.

Building Carta

Carta was born from the idea that it should be easier to track and manage equity in the private markets. By solving that problem, we could broaden the ownership economy and build the foundational infrastructure for expanded wealth and opportunity.

Unlike the public markets, there was no single source of truth in the private markets. Carta digitized stock certificates and made it easier for companies to manage their equity, expand ownership, and help owners—founders, employees, and investors—understand and maximize the value of that ownership.

Launching Carta and realizing this vision took capital. I turned to venture capital—in exchange for equity in the company, investors gave me money.

Today, Carta supports more than 40,000 private companies with over 2.4 million stakeholders and over $2.5 trillion in equity. We provide fund administration services for nearly 7,000 funds and fund vehicles, representing over $150 billion in assets under administration.

Private capital made this reimagining possible. And that is true at all stages of our lifecycle. Venture capital provided us the patient, risk-forward capital to launch our company and begin building.

Private capital drives America’s innovation engine

Private capital—angel investors, venture capital, private equity, limited partners—serve as the lifeblood of startups and growth-stage companies at every stage of development.

Private capital supports innovation by providing patient, risk-forward funding to solve ambitious problems. This structure democratizes ingenuity, drives innovation and value creation, and promotes economic growth and job creation.

Private capital has created jobs and economic opportunity. Startups and growth-stage companies backed by private capital are responsible for the bulk of net new jobs created in the United States.

At its peak, startups and growth-stage businesses accounted for approximately 3 million new jobs a year. Private capital drives job creation and economic value for its founders, investors, and employees, accounting for more than $17.5 trillion in market capitalization and value.

The capital structure to build

Like Carta in its early days, startups are often unable to access bank loans or traditional financing. Instead, they turn to friends and family, angel investors, or venture capital, which provide capital in exchange for equity ownership. Venture capital democratizes ingenuity, enabling more people with ideas to pursue them.

Launching a company that solves a complex problem, delivers a novel solution, or creates an entirely new market is hard. Building something new does not come with predictable quarterly results and can be volatile.

This is what private capital and private markets facilitate. They enable an ecosystem where ambitious ideas can flourish and that drives economic growth.

Private capital is at an inflection point—this is an opportunity

Private markets have grown exponentially over the past decade, creating opportunities. However, without modernizing the policy infrastructure, the benefits will be limited to the fortunate few.

We need to bolster private capital as the economic and innovation engine. The private capital landscape is evolving. Policy should lower barriers and help drive capital for emerging managers who support startups across the country.

Expanding private market investment opportunities should be done in a responsible manner that reflects unique but manageable risks posed by private capital. This can democratize access while preserving important investor protections.

Modernize best practices and standards

Building a private capital regulatory framework that reflects the industry model, risk profile, and needs of stakeholders will unleash capital and broaden its impact. Policy can embrace the evolving industry practices to ensure transparency and greater investor access, thus broadening the innovation engine across more communities.

Carta is proud to provide the infrastructure to support our innovators: the founders, investors, and employees who drive the innovation economy.