Why secondary volume outpaces primary
James McGillicuddy, head of strategy at Carta, on building an issuer-centric platform and investing in secondaries
The gap exists because public markets are built less as a capital raising machine and more as a constant transfer machine for ownership, risk, and price discovery. Once a company is public, the stock becomes a daily instrument for index funds, hedge funds, active managers, employees, and retail investors to rebalance portfolios, express views, and get liquidity, even when the company itself is raising little new money. Primary issuance is episodic, but secondary trading is the market’s default state.
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Primary capital is the money that goes into the company. Secondary volume is mostly money changing hands between investors. That is why a mature market can have many turns of trading for every dollar the company actually raises. In private markets today, liquidity is still episodic, so most of that churn never happens.
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That churn serves real functions. It lets early investors distribute cash to LPs, lets employees sell small portions instead of waiting for an IPO, and lets new buyers build positions gradually. Carta framed periodic auctions as a middle ground, enough liquidity for planning and price discovery, without the distraction of stock trading every minute.
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The comparison also explains why many late stage companies want something between fully private and fully public. Regular secondary windows can create a price history, help recruit against public companies, and prepare a company for direct listing, while avoiding the nonstop turnover and scrutiny that come with fully public trading.
The direction is toward controlled, recurring liquidity rather than public market style hyper liquidity. Private companies are adding structured auctions, tenders, and data rooms so shareholders can sell in measured windows. If that model keeps working, more of the value of being public will unbundle, with companies staying private longer while selectively importing the parts of public markets they actually need.