Issuer Controlled Private Liquidity
James McGillicuddy, head of strategy at Carta, on building an issuer-centric platform and investing in secondaries
The key constraint on retail style liquidity in private stock is not just investor demand, it is the moment a private company starts looking too much like a public one. Once a cap table fills up with too many outside holders, the company can lose the privacy, limited disclosure, and operating flexibility that make staying private attractive in the first place. That is why Carta framed liquidity as issuer controlled and tightly staged, not open access from day one.
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Private liquidity only works if the company keeps control over who gets onto the cap table. Carta built its marketplace around issuer approved tenders and recurring windows because private companies care most about limiting unknown shareholders, keeping transfers orderly, and choosing when to share financial information.
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More open trading pushes companies toward public company behavior even before an IPO. Regular liquidity events require more disclosure, more investor communication, and more price transparency. That can be useful for companies preparing for direct listings, as seen in the discussion of Spotify style price discovery, but it also erodes one of the main benefits of staying private.
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Tender offers show the tradeoff in practice. They are the accepted way to create liquidity at scale without opening the floodgates, but they are often priced off the last round and underprice fast growing companies. In one dataset of 64 tenders totaling more than $3B, 83% were priced at or below the last round and participation averaged 37%.
The market is heading toward more private liquidity, but through controlled programs, investor whitelists, and recurring company run events rather than broad retail trading. The winning model is likely to look more like a private company gradually learning public market habits, while keeping enough cap table control to remain private on its own terms.