Carta Subscription Cancellation Issues - Founder Concerns

Startup Founders Report Difficulty Cancelling Carta Subscriptions

The operational costs associated with launching and maintaining a startup are often substantial, frequently necessitating numerous ongoing subscriptions. Cap table management software, a crucial tool for founders to effectively organize their funding information, can represent a significant annual expense, potentially reaching thousands of dollars.

Carta's Position and Emerging Concerns

Currently, San Francisco-based Carta holds the leading position within this specialized market. However, recent reports indicate that some startup founders are encountering considerable obstacles when attempting to cancel their Carta subscriptions.

The issue gained prominence on the X platform when Pipeline founder Sudarshan Sridharan publicly shared his frustrating experience. He expressed his astonishment at what he perceived as an anti-founder stance by Carta, stating that cancelling a subscription or reaching a live support representative proved remarkably difficult.

According to Sridharan, Carta mandated a “cancellation request” meeting with a customer success manager as a prerequisite for subscription termination.

Scheduling Challenges and Renewal Dates

However, available appointment slots were not offered until December 26, a date that extended beyond his impending December 17 renewal date, as the founder detailed in his post.

Adam Ryan, CEO of Workweek, corroborated these concerns, reporting a similar experience of being unable to schedule a cancellation request before his subscription’s renewal date.

Ryan explained to TechCrunch that the system presented a calendar with the earliest available date being December 26, despite his renewal falling on December 17. He ultimately circumvented the process by contacting American Express and requesting a denial of the vendor payment, providing screenshots as evidence.

Updated December 13, 2024: Carta did ultimately cancel Ryan’s subscription on the same day he contacted them, following his notification that scheduling a “cancellation request meeting” was impossible. However, Ryan only discovered the cancellation at a later time, as he informed TechCrunch.

Carta's Explanation and Competitor Practices

In response, Carta attributed these scheduling difficulties to a “one-time staffing challenge” that impacted calendar availability, assuring that the issue was being actively addressed.

A Carta spokesperson stated that customers requiring immediate assistance could connect with their live Support Team via chat or phone during extended business hours.

Notably, several of Carta’s competitors have clarified that they do not require meetings to process cancellations.

Sumukh Sridhara, Founder Products lead at AngelList, emphasized the ease of cancellation through their platform, stating, “Customers can fully cancel their subscription directly in the software by clicking a few buttons or by sending us an email.” He further asserted that there is “no good reason” for a cap table vendor to necessitate a phone call for cancellation.

Pulley, another competitor, echoed this sentiment.

Streamlined Cancellation Processes at Competitors

Alison Gonzalez, VP of marketing at Pulley, explained that their cancellation process is straightforward, involving a simple email to support@pulley.com. She highlighted that no appointment booking or cancellation meeting is required, characterizing this as a non-standard industry practice.

Gonzalez added that cancellation requests are processed promptly upon receipt of the email, ensuring customers can cancel before their renewal dates.

The requirement for meetings introduces the potential for delays due to staffing shortages. While Carta’s website showcases appointments as readily available the next day, screenshots shared by founders reveal wait times extending to 17 days.

An additional screenshot, exclusively shared with TechCrunch, depicted a meeting regarding renewal pricing (not cancellation) being scheduled for a particularly inconvenient time: 6:00 a.m. on December 26.

Carta's Rationale and SEC Compliance

Carta maintains that its appointment system is designed to ensure customers fully comprehend the cancellation process and can seamlessly migrate their securities data. The company explains that access to the Carta platform is lost upon termination of services, necessitating secure and proper data transfer.

Carta also acknowledged that some customers may prefer a more streamlined approach and stated their willingness to consider feedback for future improvements.

Furthermore, Carta clarified that its equity administration services extend beyond a standard SaaS product, as it operates as an SEC transfer agent, requiring different procedures than typical SaaS companies.

However, Pulley, which also operates as an SEC transfer agent according to its website, does not employ cancellation appointments.

Positive Feedback and Past Scrutiny

Despite these concerns, many founders continue to utilize Carta, with some expressing strong satisfaction with the product. Comments on the original viral post included praise for Carta’s functionality and ongoing improvements.

Bill Smith, founder of Landing, shared his positive experience, stating that switching to a competitor resulted in significant issues, prompting a return to Carta.

Katie Jacobs Stanton, a firm investor in Carta, also expressed confidence in the company, suggesting a potential bug as the cause of the reported issues.

Carta has faced scrutiny in the past. In January 2024, Linear founder Karri Saarinen accused Carta of sharing private cap table data, alleging that a Carta employee contacted one of his angel investors regarding a potential share offer without his knowledge. This led to Carta’s exit from the secondary stock trading market, with the sale of this division to Public in August.