Carta CEO urges policies to promote private capital in Congressional hearing

Author: The Carta Team
Published date: 4 December 2024
Read time: 13 minutes

In his remarks at a hearing on technology and the future of finance, Henry Ward outlined how startups and private funds drive American innovation and advocated for expanding opportunities for entrepreneurs and investors.

Summary of Key Points

• 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. Our aim is to bolster private capital and broaden its impact to reach more investors, more entrepreneurs, more employees, more companies, and more communities.

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.

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.

Launching Carta and realizing this vision took capital. Like most founders, I was not able to self-finance this business and no bank would provide a business loan. I turned to venture capital—in exchange for equity in the company, investors gave me money.

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.

America’s most transformative companies—Amazon, Apple, Genetech, Intel, LinkedIn, Moderna, Palantir, OpenAI, Stripe—would simply not exist without private capital. Venture-backed companies have disrupted almost every industry, changing how we learn, work, travel, heal, communicate, and so much more.

The capital structure to build

Like Carta in its early days, startups often turn to friends and family, angel investors, or venture capital, which provide capital in exchange for equity ownership—and a piece of the uncapped potential. Venture capital democratizes ingenuity, enabling more people with ideas to pursue them.

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

Private markets have grown exponentially over the past decade, and we expect this trend to continue. We need to bolster private capital as the economic and innovation engine but we need to broaden its reach.

Expanding private market investment opportunities should be done in a responsible manner that reflects unique but manageable risks posed by private capital.

Key recommendations:

• Expand investor access to broaden its impact.
• Bolster fund managers to bolster the ecosystem.
• Modernize best practices and standards.

Carta is proud to provide the infrastructure to support our innovators: the founders, investors, and employees who drive the innovation economy. Policy is part of that infrastructure—it affects nearly every aspect of the ecosystem and can drive innovation or bind its growth.