Recurring Secondaries as Core Infrastructure
James McGillicuddy, head of strategy at Carta, on building an issuer-centric platform and investing in secondaries
The real competitor is not another startup, it is the cash value and everyday credibility of public company stock. Once a private company is old enough that recruits can compare its paper equity against sellable shares at Google or Facebook, illiquidity stops being a perk problem and becomes a hiring problem. That is why Carta framed recurring secondaries as core infrastructure, not a side benefit, for companies staying private longer.
-
Late stage private companies increasingly reach this pressure point because they now stay private for roughly a decade or more, while employees vest in four years and start making real life decisions around housing, debt, and family. Without a way to sell some stock, many value their equity at close to zero in practice.
-
Tender offers only partly solve the problem. They are slow, episodic, and usually priced at or below the last round. In a dataset of 64 tenders totaling more than $3B, 83% were priced at or under the last round and employee participation averaged 37%, which shows workers often do not like the price they are being offered.
-
Carta’s pitch was that issuer controlled auctions could make startup equity feel more like a predictable compensation stream. The company can choose who buys, how much can trade, and how often auctions happen, while using the resulting price signal for recruiting, cap table planning, debt, M&A, and eventually a direct listing path.
This pushes late stage startups toward a middle state between private and public. The likely endpoint is not nonstop trading, but regular company run liquidity windows that let strong private companies hire against public peers, refresh their cap table, and build a pricing history before they ever need an IPO.