Private Market Liquidity Concentrated in Top 25
Javier Avalos, co-founder and CEO of Caplight, on building synthetic derivatives of private stock
Private market liquidity behaves less like a broad stock exchange and more like a winner take most market around a small club of mega unicorns. The biggest 25 names get most of the trading because they have more shareholders, more stale gains to lock in, and more outside reference points from recent rounds and institutional investors, which makes both spot trades and derivatives easier to price and execute.
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The practical reason is float. Late stage companies have more employees, more former employees, more seed funds, more growth funds, and more crossover investors holding stock, so there are simply more natural buyers and sellers to match in names like Stripe or Databricks than in a smaller unicorn.
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The other reason is information. A $10B plus company usually has a recent financing led by large institutions, which gives the market an anchor for valuation. Smaller private companies have fewer data points, so every trade needs more bespoke diligence and price discovery, which slows activity sharply.
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This is why different platforms split by customer and workflow. Forge, CartaX, Nasdaq Private Market, and similar venues focus on moving actual shares or issuer run tenders, while Caplight focuses on institutions that want economic exposure or hedging without waiting weeks for share transfer approvals and settlement.
As private markets mature, liquidity should keep moving outward from the top names to a wider set of billion dollar companies, but the center of gravity will remain with the largest issuers first. The next step is more standardized pricing, research, and hedging around those names, which makes the private market look progressively more like a layered public market.