Liquidity Not Capital Drives IPOs
James McGillicuddy, head of strategy at Carta, on building an issuer-centric platform and investing in secondaries
Late stage companies increasingly went public because too many people on the cap table needed cash, not because the business needed fresh funding. Once a company stays private for 10 plus years, employees have vested stock tied up in life decisions like housing and family, and early funds need distributions to raise the next fund. That turns liquidity into a governance problem, a recruiting problem, and eventually an IPO forcing function.
-
The public market bundle mixes three things, capital raising, shareholder liquidity, and broad investor access. For mature private companies, liquidity is often the urgent one. That is why direct listings and structured secondary programs emerged, they let insiders sell without treating the listing mainly as a fundraising event.
-
In practice, private companies feel the pressure first in hiring. Once candidates can compare an illiquid startup grant with liquid stock at a public company, equity starts getting valued at near zero unless there is a credible path to sell some of it. CFOs described this pressure showing up most clearly from Series C onward.
-
That is the opening CartaX was built for. Rather than waiting for a one off tender or a full IPO, the pitch was recurring company controlled auctions where employees and early investors can sell some stock, while the issuer still controls buyer access, disclosures, cadence, and cap table composition.
The market is heading toward a middle state between fully private and fully public. Companies that build repeatable secondary liquidity earlier can delay an IPO until they actually want public currency, brand visibility, or permanent market access, instead of using the IPO as the release valve for years of pent up seller pressure.