Quarterly Auctions Increase Seller Proceeds
James McGillicuddy, head of strategy at Carta, on building an issuer-centric platform and investing in secondaries
The real advantage of recurring auctions is that they turn one forced sale into a series of smaller sales made into a rising market. In a traditional late stage round, an early fund often has to decide all at once whether to sell, at a price anchored to the round. With quarterly auctions after that round, the fund can sell some shares now, keep exposure to later upside, and use fresh market pricing instead of being stuck with a single negotiated moment.
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Tender offers and round linked secondaries are usually priced at or below the last round price. In a dataset of 64 tender offers totaling more than $3B, 83% were priced at or under the last round, which means sellers often leave upside on the table if the company keeps compounding between rounds.
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Carta’s model was to let issuers run quarterly or even monthly auctions, with sellers entering limit orders and buyers competing upward over several bidding rounds. That matters because a seed or Series A fund can sell 10% to 20% at one price, then sell more later if demand and company performance improve.
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This also fits how venture funds actually manage portfolios. Secondary liquidity lets a fund return some cash to LPs, raise the next fund with realized distributions, and still keep meaningful ownership. The broader private liquidity research frames this as rebalancing, not exiting, and as a way to refresh the cap table without dilution.
If recurring auctions become normal, private market selling shifts from a rare event to a portfolio management tool. That would give early investors a cleaner way to harvest gains over time, give issuers better ongoing price discovery, and make the path from a $1B round to a $5B company far less dependent on one imperfect transaction.