Progressive Price Discovery for Private Companies
Charly Kevers, CFO at Carta, on progressive price discovery and investor relations
The white space is the missing set of tools that let a late stage private company act a little more like a public company without actually going public. Once a startup is large enough, episodic tender offers and new primary rounds are too blunt. Finance leaders need ways to let employees sell small amounts over time, swap out older investors for better aligned ones, and build a real pricing history instead of waiting for one giant IPO moment.
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Private companies now stay private long enough that cap tables get crowded with early employees and investors who may want liquidity, while new strategic investors can only come in through dilutive primaries unless existing holders can sell. That is why secondaries matter as a cap table management tool, not just an employee perk.
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The current default tool, the company tender, does not fully solve this. In a study of 64 tender offers totaling more than $3B, participation averaged 37%, and 83% of tenders were priced at or below the last round. That makes liquidity infrequent, underpriced, and unattractive for many employees.
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The practical model is progressive price discovery. Spotify ran recurring liquidity events and regular disclosures before its direct listing, using secondary trading to establish a believable price range. That is the kind of middle ground CFOs want, a controlled market that gradually trains the company, its shareholders, and future investors.
This middle ground is becoming core private market infrastructure. The next step is more recurring, issuer controlled liquidity with better disclosure, better investor access, and tighter integration with the cap table system of record, so companies can stay private longer without forcing employees, investors, and founders to wait for a single all or nothing exit.